Windows 7: Green Ribbon of Death is back with venegeance

I've checked the older threads for the Green Ribbon of Death solution, and none applied to me.

When using Explorer, the green ribbon (running along the address bar) grows slowly, and when entering the last 5% of full length just crawls to a halt. This happens practically with any folder, even when I go Start->Computer. In most folders it would show the contents of the folder but not allow much to be done with it. With Start->Computer it would not even show the drives. I am out of ideas.

For the time being I have switched back to XP (I am running dual OS on the same machine), but would really like to get back to my Windows 7.

What antivirus or what third-party Windows Explorer extensions have you installed? Most extensions add some right-click menu or other element to Windows Explorer.

Antivirus: Avast!
Third-party extensions: Can't think of one. In terms of installed software the two culprits that I can think of are Daemon Tools and EASEUS Partition Master 4.0 Home Edition but I've had them there since installing Windows 7 and made no changes to them recently...

Tried to see how else I can recreate the issue. Opened a folder with 100 MP3 files, tried playing the files - no issues. Then right-clicked on the Details bar and added "Album" and "Title" columns. The values didn't get displayed, but the green ribbon started running slowly across the address bar and the problem is back. Could it be a problem of sharing ownership of files with Windows XP? But then, I've always ran dual OS and never had this problem before.

Also, right-clicking within the folder didn't reveal any options in the context menu that would not have been there on fresh install, except for the ATi's CCC.

I've decided to change ownership from Administrators to my user name on C: drive and see if that's gonna do any good...

Mounted any drives? I can just imagine Windows Search or Indexing having difficulties completing if you have done this... just the sort of possibility that would explain the progress bar taking a long time to reach it's zenith...

No, no drives mounted. And the problem remains with Daemon shut down.
I tried doing a random search, using "TagScann" as a search string, because I knew I had TagScanner installed on C:\. After running for ages, and looking anywhere but C: drive, it finally returned the remarkable result below.Never seen anything like it before.
The funny part is that Windows keeps running as if nothing is wrong, it is just the Explorer which is going off the rails.

Ad then I decided to double click one of these results... At which stage a Windows Security window popped up, letting me know that "These files can't be opened" - "Your Internet security settings prevented one or more files from being opened." Since when do Internet security settings apply to my own local C: drive?! This is just getting hysterical.

I actually managed to go into these Application Data folders from command prompt, by "cd"ing into these folders. You can't see them in explorer, even with hidden files and folders viewable, but they are definitely there... I'll try to log in from XP and do a scandisk on this drive...

You changed the permissions on those junctions...and caused an infinite loop. Was this before you were having problems or is this new? Like I keep saying, those folders that deny you access, do so for a reason.

The GRoD was there before I changed permissions, but the search issue was not. So I guess although they look similar, they are not related.
I'll probably have to reinstall, which is a shame, but at this stage I am completely out of ideas.

Is your disk defragamented? Have you scheduled a chkdsk check on the hard drive?