Well, I am looking at the registry. Right now in IE7 the feed finder will only find RSS. To add more types, goto
HKEY_LOCAL_MACHINESoftwareMicrosoftInternet ExplorerFeed Discovery
you can add other types there
like application/atom+xml
Close all IE windows, and then goto a site with an atom feed. The feed discovery button will light up!
Steve Novoselac's Blog 