After installing IE 7 Serv Pack 2 update, I now get a yellow triangle w/black exclamation mark in it  in the bottom right tray.  A balloon note says:

Corrupt file or dictory information C:\system volume information\_restore{46DE8921-1D39-44D2-A9E9-64119261F211} rp280 is corrupt and unreadable.  Please run chkdsk utility

I get this balloon note every once in a while now, but things seem to run ok.  I ran the chkdsk utility.  I also ran RegVac.

Is this a problem real bad problem ?

It looks like the restore point created when you installed the service pack update was corrupted somehow.
I would go into system restore and delete it. If there are no later restore points, create a new one after you delete it since the system is running well.
Be sure to reboot after you delete the corrupted file, before creating the new restore point.
That should get rid of the warning message.