I went to http://windowsxp.mvps.org/slowrightclick.htm and used Method 1. By deleting the HKEY_CLASSES_ROOT\Directory\background\shellex\ContextMenuHandlers\NvCplDesktopContext key from the registry the problem went completely away. Of course, this changed the desktop right click menu as well.
A few notes.
- Make sure you backup the registry or at least the keys you are changing before you make any changes to the registry. I backed up HKEY_CLASSES_ROOT\Directory\background\shellex\ContextMenuHandlers (using Export from the registry editor) and saved it on my desktop. I then started deleting context handlers until the problem went away. I then restored all of the deleted registry keys and deleted just the one that was causing problems.
- Method 1 describes several different types of registry keys that may need to be deleted to handle different kinds of problems. Since my problem was with right clicking on the desktop, I deleted keys in HKCR\Directory\Background\shellex\ContextMenuHandlers.
- I tried Method 2 first (it's easier). However, Method 2 simply failed. I disabled every shell extension in the system with no results. Later when I knew exactly what shell extension was causing the problem, I disabled just that one. Nothing happened. Sadly, ShellExView is an amazing tool, but didn't work in my case.
- Note that the NirSoft WhatIsHang tool failed in this case as well. For whatever reason, it never detected any hanging applications or tools even when right click took 30 seconds.
Hope this helps...