With the explorer taskbar showing up... does that only happen after you've opened a file manager window? You might be running into a common problem, where using explorer as the file manager ends up causing it to start up as the shell, too. When you right-click on a file it can cause the explorer taskbar to come on top of LiteStep interface parts (lsboxes, taskbar, etc.) and that may be what you're seeing. Check the "IMPORTANT" sticky thread in this forum and see if any of those tips help.

As for files that you save to the desktop showing up under explorer but not LiteStep, that's normal. The desktop that you see under explorer is actually a file folder, so it will show those files. The desktop under LiteStep isn't, so it doesn't.

The problem with not being able to delete the file is a different problem altogether, tho. My advice would be to either boot into safe mode and see if you can delete it that way, or get the MoveOnBoot program from here:

http://www.gibinsoft.net/gipoutils/index.htm

Once you've installed that, use it to delete the file on the next boot. That should let you get around the problem. It's not really something that's related to either LiteStep or explorer. It just seems to happen sometimes with Windows. :(