Unfortunately we heva not been able to reproduce this problem with the release version 10.0.0.2 or newer - which prevents us to fix the problem.

Workaround:
Please install the latest update of Virtual CD v10. Uncheck the option 'Activate the Virtual CD Explorer extension' on Explorer Integration page of Virtual CD Settings (Right-click on Virtual CD icon in the SysTray of the task bar -> Settings -> Explorer Integration)

Information:
However we experienced the problem with earlier versions (RCs and betas) of Virtual CD v10 which had the reasons:

• After a right-click the process verclsid.exe (Extension CLSID Verification Host) appeared in the task manager. This is a program which validates shell extensions before they are executed by the Windows shell or Windows Explorer. Terminating this process over the task manager makes the right-click work again. This means that the problem is not due to the Virtual CD explorer extension, but to the Extension CLSID Verification Host.
  There is the possibility to set some registry keys which make the program not to check specified shell extensions. That's what we're doing in Virtual CD 10.0.0.2 and that's why we did not encounter the problem anymore.
• Furthermore we found out that after opening the context menu once successfully the problem does not occur anymore. The right-click had to be done directly on a drive - not a folder or a shortcut.