I'm pretty sure I have this figured out (after working on this issue for almost 6 hours!)

Again, it seems like it was a toolbar/addon related issue...

 

I noticed that the User Agent of IE was changed because of Windows Live related software... It appended 2 "Office Live... " entries to it.

 

After completely uninstalling the applications (disabling the addons did not work because the User Agent still had the new entries) the CuteEditor rendered fine. The appended entries in the User Agent were gone.

 

Edit: Is it possible that the routine used to determine how the editor should be rendered did not recognize the browser?