Are you using an OTS2 format theme? I wonder if your FileManager evar is not being set correctly. You should have a line in your personal evars.rc folder that looks like this:.
The fact that the taskbar shows up makes me think that explorer *is* being run, but it's not getting those arguments, and for some reason is it starting as the shell rather than the file manager. Did you install (or uninstall) any other software just before this started happening?