Bizarre FP 2003 Problem

I am having a really strange problem with my FP 2003 SP 3 program. When I
create a new web site locally everything is fine. However, when I close FP
and reopen, the task bar at the bottom left shows Loading z:\website but is
blinking really fast. The Red X to Stop in the too;bar is also blinking fast
and my mouse cursor blinks. Although if I click on Navigate, I can view the
site/pages in the right pane, but when I try to view the folder list in the
left pane it is blank. I am running Windows XP Pro, all other software is
functioning fine. I have uninstalled and reinstalled Frontpage and SP 3 to no
avail. Also, if I open a online web site, it works just fine. It just seems
to be with new sites I am creating locally. I have also tried this 4 times to
see if it was maybe a page for the site.
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Thanks for your help.