Both the Internet control panel and the File Exchange control panel in Mac OS 8.5 use version 2.0.2 of the Internet Config Extension. However, several installers (typically web browsers and email programs) may automatically replace that extension with an older version.
To resolve, use the Mac OS 8.5 Installer and do a custom install of the Internet control panel. The installer will automatically reinstall the Internet control panel as well as the latest version of the Internet Config extension.