According to Microsoft, the IE 7.0 Beta 2 can only be run on Windows XP with SP2 installed. It will update your IE 6.0. The following is a work around for that so you can still run 6.0 and 7.0 beta 2 side by side on any NT version.
**I must note, I cannot and will not be responsible for any problems 7.0 or the work around to run them side by side will cause on your system. Some users have reported IE 6.0 acting funny when running both at the same time, or choosing a favourite from IE 6.0 if running alone (takes a while to load the favourite, but it will load and loads an extra IE 6.0). or 7.0 crashing after being loaded up again. If that is the case, I would recommend uninstalling it. Otherwise do the update on an XP SP2 machine and let it update IE 6.0 as MS says it should do. I personally am running both of them together and I am not having any problems. But, that is just me, and as I stated, I am not responsible for anything this does to your computer.**
The workaround that I used is:
1.) Create an IE7 folder on your desktop. Download and extract the exe to this folder (In XP, I right clicked on the *.exe and told it to "extract here". I am sure Winzip or WinRAR will do the same thing if you want to use that.)
2.) Delete the UPDATE subfolder that formed under the IE7 folder that you made.
3.) Delete the shlwapi.dll in the IE7 folder that you made and extracted the IE7.EXE to.
4.) Create a BLANK FILE called IEXPLORE.exe.local with notepad.exe and putting it into the In the IE7 folder that you made and extracted the IE7.EXE to.