Their reasoning was to help prevent Phishing scams, where the syntax http://userID:Password@yourdomain.com could be reworked to fool you into believing you were going to another site.   Here is an article by Microsoft on the subject.

The fix is simple:

  To download and run the patch, get this Zip file and double click  the included .reg Registry file.

This must be done on the machine running Lynx Messenger.

After loading the registry patch, close all IE Windows and then send an alarm.  LynxMessenger will work with web cameras that have User ID and Password enabled.

You will need to allow the running of Active X controls for this patch to work.