Had an issue last year at a client’s site where a user noticed that they were unable to view a document library using "Explorer View". They kept getting the IE window, but where the explorer view would normally be, there was just a 404 error message.
Turned out she suffered from an "I found it First" syndrome – everyone had the same problem… with that site and that one only. Well, that makes it a bit easier – gotta be on the server! Eventually we traced it back to a mis-configured managed path hierarchy. This particular client had set up the following managed paths:
This plays havoc with SharePoint Designer because it can’t resolve the webdav path properly… and I guess behind the scenes that’s what the explorer view is doing as well. Anyway, replacing http://intranetsite/IT/Department with an explicit inclusion and a placeholder web site did the trick.