Sorry I missed seeing this other problem. Have you tried removing MS upgrade KB908531?? May work after a restart.
Dave

Microsoft's patch adds a executable file called Verclsid.exe, which validates shell extensions before they are loaded by the Windows Shell or Windows Explorer. HP's Share-to-Web Namespace Daemon (Hpgs2wnd.exe) causes Verclsid.exe to stop responding. The problem is usually but not always connected with Hewlet Packard software and NVIDIA. Try it you can always reinstall it

Another thought. Try updating the NVIDIA driver in device manager (display adapters). This has been known to work.

This may be worth reading:
http://forums.techguy.org/windows-nt-2000-xp/368431-solved-right-click-any-file.html#post2665614

Dave

I have the same problem. Followed the suggested steps and deleted desktop.htt. I then tried to refresh Desktop, but nothing happened; I still get the Active desktop recovery/Script error warning.
Any idea what's going on?

Great, it was a difficult one but I found the answer on Ask.com. Better than Google sometimes, worth remembering.
Dave

hey, Oded, i'm glad you got the context menu problem sorted also [I'm just going through catching up on things..]. The Identify button? - you would not see that unless you had a video card capable of handling multiple displays, so nothing missed there [all Identify does is show you which screen driver/channel number you're watching..]. And i guess Acronis just were not IE7 ready.

Thanks Gerbil !
It really works ......

desktop.htt pretty much controls the size and position of your desktop and the wallpaper you have on it, plus it includes a little activeX control to allow you to reshape it..... IE7 is a little bit incompatible with the old profile you may have had already. Since this file is automatically generated by windows, the best fix is to delete the old one[s] and let windows create a new one. To do this open an explorer window and go to tools > folder options > view, and uncheck hide protected opsys files. Apply and ok. Then do a search in your sys drive [usually c: ] for desktop.htt. It will be in Docs and Settings\User\Application Data\Microsoft\Internet Explorer. Delete them [it, whatever...]. Close the explorer window, rclick your desktop and click Refresh, and then go back and RECHECK that box. you really don't want those special files exposed all the time!!

Gerbil, I am trying to take ur advice on this same matter, but after deleting and refreshing it still didn't solve the matter. My Q. is , when you say "delete them, it " I have 4 or 5 files, but only the one under the exact location you say above did I delete. should I delete all the others also?
Thanks

There should only be one desktop.htt in each user's Application Data\Microsoft\Internet Explorer folder. Delete it, because it will be regenerated. And restart; log off/on should work also... other users may have to do the same with their file.

There should only be one desktop.htt in each user's Application Data\Microsoft\Internet Explorer folder. Delete it, because it will be regenerated. And restart; log off/on should work also... other users may have to do the same with their file.

Sorry that I have so many questions, I only have one account, but two (admin)-desktop .htt folders, and one (computer) -desktop.htt folder and a (system 32)- desktop folder.
I really need this spelled out like a baby cause I'm not real sure how this works.
which ones are going?
thanks again.

It seems all the fixes for this problem has to do with opening IE. I cannot open it at all. When I click on IE, nothing happens. If I try to get into any other program, the Active desktop recovery message comes up.

Argh!