On both my Slack 10.2 installs (2.4 Kernel), if I have an instance of, say Firefox, or XMMS open, and I open another, the system hangs. The cursor becomes the "Loading" icon of whichever application I am loading. It turns its wheels for a while. The screen doesn't refresh properly so if I move the cursor it leaves a trail etc. Eventually, the second instance will close out and I can get back to work. If I launch a new window from within firefox (file> new window) this does not happen; it only happens when I try to open 2 instances of something from KDE.

I have already installed the latest version of KDE to see if that would help- no luck.

I would rather not do a 2.6 kernel upgrade because both of these machines are used for work purposes and I don't want to risk messing them up, especially because one is a laptop and I don't want to go reconfiguring sound, mouse, hybernate etc.

Anyone else experiance this? ideas for fixes?

Not sure of a fix, but I know xmms can be configured to disallow multiple instances, and this may be the default behaviour. In my experience it just won't start a second instance though, not lock up as you describe.
As for new instances of Firefox, I normally get a "Select profile" dialog. Both these behaviours are under the latest xfce.
For KDE, I have noticed the odd "startup notification" bug like that. Maybe try disabling startup notification for programs you use a lot (it should be a property for the shortcut). Also ensure your startup-notification package is up to date (check the version in /var/log/packages).
Hope that gives you some ideas...

Interesting. Thanks for the info. I will look into startup notification.

BTW, its not just XMMS and firefox. It is most apps. Some apps, like Konsole, do not do it however.

Oh, what logs would be relevent here? Maybe there is an error occuring?

Well, I disabled launch feedback and it fixed the problem!!!

What is launch feedback? Do I need it? How can I disable it system wide if I don't?

Launch feedback is the little bouncing cursor that tells you that something is loading. I believe it takes the icon of the app and bounces it near the cursor (and on the KDE bar at the bottom) until the app is loaded. The version of startup-notification that I have (which I believe is the basis for launch feedback) is only version 0.8, and so there may be bugs present.
Not sure of a way to disable it globally, but maybe KDE Control Center has something in it. Either way, at least you can manually disable it for commonly used apps.

I am going to try to install a newer version of startup notification first. Thanks for the help!