I have Windows XP SP3 and every file I download is automatically encrypted no matter what directory I save the downloaded file in. So it's not as simple as turning off encryption of any specific directory, the file will be downloaded as encrypted regardless of whether the directory is encrypted or not.

Is there a policy or registry setting somewhere to disable this automatic encryption?

(EDIT: I doubt it's malware since this OS was just installed on this machine. It's my work PC and by default I think there's some group policy or other setting which not only sets everything in My Documents to encrypted, but also everything I download, no matter where it's downloaded to. )