Ah, I think Ive got it.. trilobyte was right. Hang on..
OK, so Ive removed c:idefix from startup-sequence. it still gives the 'invalid resident library', but now after the workbench bar appears a CacheCDFS requester is displayed. You know, the No, Never, Yes, Perhaps one. After clicking Yes, another lockup and no more activity.
could it then be the cd filesystem?