Marking the Fences folder as "Exlcuded" within Kaspersky IS 2010 seems to have done the trick. Thanks for the tip.
ConorShields
If I disable Kaspersky 2010, the errors and crashes stop... However, Fences is marked as a "Trusted" application within Kaspersky. I'm not sure what the answer here is - I can't leave Kaspersky stopped forever, but Fences is already "allowed". Perhaps Fences is trying something at a lower level within the OS which KIS is objecting to?
I run Kaspersky IS 2010, but no other customisation software. I'll try disabling Kaspersky and see what happens.
I don't have to have anything else running - any rename or delete action on a file on the desktop will cause windows explorer to crash and restart. The version of fences I am running is: 1.00.4275 (the latest, I think). It does this on two different installs of Win7 x64 that I have.
I have run Fences and Fences Pro on Win7 x64. While I really like it, there is one very frustrating aspect. Everytime I add a file / folder to the desktop (inside or outside a fence), Windows Explorer crashes, and has to restart. It also happens if I rename a file on the desktop. Any ideas for a fix / workaround?