I have the same problem: Any files I access from inside a fence gets moved to the desktop upon creating a new file on the desktop and renamed to the new file name. For instance, right click on desktop, create new text file and name it "blah". Upon hitting the enter button, any file I have opened within the fences jumps/moves to the desktop and gets renamed to "blah".
Right now it seems fences has crashed and all my icons that I had in fences are scrambled all over the desktop. Is there a way to restart fences without re-booting? I tried restarting explorer.exe and that doesn't help. I also tried starting fences with the fences.exe but get a message saying Fences doesn't appear to be loaded, you might have to re-install fences.
Any help will be appreciated.