The problem is: if you add '%01someURL' after an 'about:somecode' URL, IE thinks that the document is
loaded from the domain of 'someURL'. Very strange?

Some of the bugs are:

1) IE allows reading local files and sending them to an arbitrary server.
The filename must be known.
The bug may be exploited using HTML mail message.
Demo is available

2) IE allows "window spoofing".
After visiting a hostile page (or clicking a hostile link) a window is opened and its
location is a trusted site. However, the content of the window is not that of the original site,
but it is supplied by the owner of the page. So, the user is misled he is browising
a trusted site, while he is browsing a hostile page and may provide sensitive information,
such as credit card number.
The bug may be exploited using HTML mail message.
Demo is available

3) Reading AUTOEXEC.BAT using TDC.
Demo is available:

Workaround: Disable Javascript