Most often I see this problem in one of the following three scenarios:
1. I have a hard drive, CD-Rom, or other physical storage device attached
to the system that is not functioning properly.
2. I have one or more network drives mapped to resources which no longer
exists (actually, most of the time this doesn't cause the problem, but I've
seen it).
3. I have one or more network drives mapped to resources over a slow-speed
or WAN connection. Because Windows queries all the connections when you
launch Explorer, if some of those connections require time to return their
state, Windows may hang while waiting. However, this usually results in an
hourglass that goes away after 5-10 seconds, not an hourglass which hangs
indefinitely.
You can also perform a repair on the OS (boot using the setup CD and select
REPAIR from the list of installation options), or try installing all the
updates from the Windows update site.
-Bob