Hello!

Don't worry - there is *no* functionality behind that.
It can NOT affect IE's work with language scripts:

it's just a menu with single-line window to show an item from that
menu. Which item is shown - does not matter, it does NOT mean
that say Cyrillic is now you Default setting, not at all.

Again, it's just an item shown in that single-line window,
not any kind of setting.

By the way, Internet Explorer does not have any setting in
any place of its options to specify a Default
Character Set Encoding (unlike Netscape/Mozilla), so don't worry.

That is, it does *not* matter which script is shown in that
single-line window. A user can:
- open that scripts menu and select "Latin based". There, one
  could select *fonts* - for example, I selected "Arial" instead
of the default "Times New Roman". It means that in future, if I go
to a Web page of "Western European" encoding, for example, German
or English, the page will be shown in "Arial" (if page itself
does not specify its own fonts)

- when I am done (selected *fonts* for Western pages) I am out of
that Scripts drop-down menu - and, again, it does *not* matter which
item  of that menu is shown - no functionality behind that.
- now I could go to that menu again and choose say "Greek". Then I am
able to specify my choice of *fonts* for the Greek pages if I even
visit one.

Again, no "language script selection" there, just fonts selection per
specific script.

What do you mean? You may want to see what is your
Default (system) Locale (i.e. system code page) -
in Control Panel go to "Regional Options" and click
on "Set Default" button at the bottom of General tab.