I have a folder that all the files I download off bitorrent go into. Anytime I open this folder and it begins to show the thumbnails (it's all movies) it pops up and says it has encountered an error and needs to close. Any help would be greatly appreciated.

Very possibly one of your files is corrupted in some way, and explorer is having a time creating a thumbnail. What happens if you change the view to say, Details?
WMP also gets into the act somehow... I think.. and do not know... that it is it that creates the thumbnails or loads previews of the movie files, it has the codecs... something for you to check out.

As Gerbil stated, one or more of your files are probably corrupted and downloading from a torrent is a good way to get viruses. I assume you have a good virus scanner, check the whole folder by right clicking on it and running a scan on it.