How do I get rid of Document and Settings folders links in the start menu? When I attempt to delete them, the actually folder on the hard drive go to the recycle bin as well.
The folders are not for applications, they are documents and settings folders for users. They don't act like shortcuts because when I attempt to delete them, the folders are removed from the Documents and Settings directory and they even look like real folders from the properties. If it matters, I notice that there is a new folder within the Documents and Settings directory called Programs, with a subfolder named Startup.

You should be able to turn it off via the Taskbar Properties, or using X-Setup.