There is a design flaw in both Internet Explorer 5.0, 4 for Win9x (NT versions seem unaffected) 
and Netscape Communicator 4.51 for Win95 (guess all 4.x versions are affected) 
in the way they handle bookmarks.
The problem arises if the user bookmarks (adds to favorites) and later chooses a specially designed 
"javascript:" URL. When the bookmark is chosen later, the JavaScript code in it
is executed in the context (the same domain and protocol) of the document
opened prior to choosing the bookmark. So, the JavaScript code has access to
documents in the same domain. An interesting case is choosing the bookmark
when the active document is a local file (the protocol is "file:") - then the
JavaScript code has access to local files and directories.
The vulnerabilities are more serious for Internet Explorer 5.0.

Some of the vulnerabilities are:

 For Internet Explorer 5.0:
  Reading local files if the filename is known;
  Reading files in the domain of the active document (even if the web server is blocked by a firewall);   
  Reading links in the active document and in documents in the same domain;
  Web spoofing of documents in the domain of the active document;

  Demonstration is available at: http://www.nat.bg/~joro/favorites.html

 For Netscape Communcator 4.51:
  Browsing local directories;
  Reading local files in the directory of the active document;
  Reading links in the active document and in documents in the same domain;
  Web spoofing of documents in the domain of the active document;

  Demonstration is available at: http://www.nat.bg/~joro/bookmarks.html

Workaround: Disable JavaScript or do not bookmark untrusted pages

Georgi Guninski
 http://www.nat.bg/~joro
 http://www.whitehats.com/guninski