Windows Desktop Gadgets has Stopped Working.

What gadgets do you have running? Can you stop all the gadgets but leave one of the default Windows gadgets (try just having the Windows clock running) so the sidebar.exe process is still running, reboot and see if you still get the error.

Just a question, but do you have a webcam, and the application for it running? I've seen users having the gadgets stopped responding problem and their webcam app causing it.

Hmm, remember doing anything right before it started happening? Updating something, installing something?

One thing you might do is go in the Action Center and see if you can find any reference to the gadgets with one of the red error signs, and click on the technical details of it, post a shot of it. Like this -

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Only other thing I could think of is to do a Repair Install. Might take a while depending on how big your OS image is. Sort of a big step for just the gadgets, but might be worth a shot. Just read the warnings on the tutorial to know what to expect before proceeding, if you do.

Or a System Restore before it started happening.

Sorry, I can't think of anything else.

Glad you found the problem. If it acts up again because of flash, you might try the flash 10.1 Beta 2 instead of 10.0.42.34, I've been using it without any foreseeable problems. :)
Adobe Labs - Downloads: Flash Player 10.1