Are you sure LS isn't open? It won't be listed under "Applications" but will be listed under "Processes" in Task Manager. Does pressing Ctrl+Alt+F1 do anything? If so try selecting Utilities > Litestep Control Panel and load the simplicity theme.

Also try running explorer and look in the step.rc file for LS (not the theme) and make sure it is correct.

I'm only guessing at what the cause could be.