I wrote the full instructions below before I re-read your message and saw that you had Explorer Plus installed (as I used to having used the Mijenix version since it came out) so I don't know that the Avantquest fix will work. But I'll leave it for the moment.
The easy solution would be to uninstall Explorer Plus -- possibly using RevoUninstaller which uses the uninstall module the application supplies but can then (it's optional) go way beyond that in cleaning up left-overs. That should remove the registry entry that causes the Context Menu error.
I use PowerDesk all the time because of how it simplifies drag and drop with its two windows (Shades of Norton Desktop for Windows) and its other features but that's up to you.
If you decide just to remove Explorer Plus and that clears the problem that's fine. If you want to keep Explorer Plus and fix the problem let us know and I'll look out the Registry alteration. If you decide to remove Explorer Plus and install PD7 I hope it goes well.
Let us know whichever ....
AVANTQUEST ONLY
According to Avantquest the fix applies to PD 6 & 7, although that may not mean that the problem does not go back earlier!
I can't find a URL that always goes direct to the solution but try this one:
http://kb.avanquestusa.com/al/12/1/article.aspx?aid=4030&tab=search&bt=4&r=
but sometimes that comes up with a blank page unless you are already on the Avantquest USA website.
If that does not take you to a document 4030 PowerDesk crashes when right-clicking on some files and folders. then follow this route:
Go to:
http://kb.avanquestusa.com/display/4/search.aspx?tab=search
and scroll down to the second part of topics until you see that document by name and click on it to go to the contents.
Whichever way, I suggest you print out the document so you have the instructions in front of you. The instructions are very clear and include how to download the fix:
Scroll down to the end of the document and you will see
Attachments
with a paper clip at the left.
Follow the instructions to download the file that is there. Make sure you Save the file and know where it is on your hard drive.
I hope that fixes the problem -- it did for me. If it does not then do the Check they give to see if those files are as they should be.
If they are not then come back and I'll tell you what I had to do on a second installation when the wizard did not work.