I have finally figured out what was stopping LyX 1.6.7 not to respond to File->Save, File->SaveAs, File->Open,... on Windows 7 (x64). It turned out that I had disabled the "Tablet PC Input" service. Re-enabling that service fixed the issue. What I can't digest is why LyX 1.6.6 does not requires that service?
Thank you all for your suggestions. Best, Mukhtar