A work in progress
nice I like, it looks very Fedora like!
Doesnt that depend on explorer.exe or does it use the thinapp powershell?
Is the halt caused when you replace your explorer.exe with your KitroOS.exe infact a kitro fault or perhaps it's just loading before some of its dependencies are available?
See the 5th post in this Link
for ideas how to start it last. Although it seems you may already know about this.
Another cheat idea would be to set the desktop background to a solid colour (the same as your login screen) and have the logo flash over it in another colour.
Anyway good luck, you really are taking customisation to the next level. I believe a personal computer should be just that, personal, and that shouldnt be limited to the desktop background.