Applications fail using file open dialog to select image 1. upload to a siverlight app, 2.. attach image to outlook message, 3. insert image in Word template

I have an HP Pavilion laptop (dv7-3085dx), running W7 pro 64 bit. For months I had problems with selecting and uploading images. I thought this was just a problem with some older apps until I got a new Win7 PC at work and have not had these problems.
Issues history:
Graphics s/w
- A free version of Corel Paint shop v2 was included with the laptop and I had an older version version. Both apps would work briefly and then crash while working with images

Uploading images to a webapp
- our site has a web app for entering stories, along with an image. I couldn't test this app from my laptop as almost every time I tried to browse to select an image to upload, the screen would freeze and a browser not responding message would appear. This would happen with IE8, Firefox 3.5+, and Chrome.
- I am working on a Silverlight app that also has a component for uploading images. Same problem. I thought I had a possible symptom when I tried to browse and use a non-image related folder. An image folder like My Pictures would default to thumbnail view and crash quickly. I was able successfully upload image few times from other folders - for a short time and then started to get the same crashes.

Outlook
- same app not responding message trying to attach an image to an email

Word
- same app not responding message trying to add an image to a Word template (see attached)

I installed the Windows Virtual PC XP mode and do NOT get these errors - so the issues are not application related but appear to be O/S related.

This is very frustrating, as this doesn't seem to be a common problem. Is there a patch needed, what can I do to diagnose this further?