Same issue here.  Docky won't start after the last update.  I flushed all the gconf and .local settings have followed the steps above for a thread dump.

Ubuntu 9.10 x86_64
Linux perdain 2.6.31-19-generic #56-Ubuntu SMP Thu Jan 28 02:39:34 UTC 2010 x86_64 GNU/Linux
(on -19 still due to a macbook pro 5,3 sound issue on the -20 kernel)
Video Card:  02:00.0 VGA compatible controller: nVidia Corporation G96 [GeForce 9600M GT] (rev a1)
                     nvidia-glx-195         195.36.15-0ubuntu1~karmic~nvidiavdpauppa2
Package source:  deb http://ppa.launchpad.net/docky-core/ppa/ubuntu karmic main


plewis@perdain:~$ docky --debug
[Info  14:47:42.364] Docky version: 2.1.0 bzr docky r1264 ppa
[Info  14:47:42.371] Kernel version: 2.6.31.19
[Info  14:47:42.372] CLR version: 2.0.50727.1433
[Warn  14:47:42.478] [GLib] g_set_prgname() called multiple times
[Debug 14:47:44.716] [UserArgs] BufferTime = 10
[Debug 14:47:44.716] [UserArgs] MaxSize = 2147483647
[Debug 14:47:44.716] [UserArgs] NetbookMode = False
[Debug 14:47:44.716] [UserArgs] NoPollCursor = False
[Info  14:47:44.799] [DockController] Setting theme: Classic
Full thread dump:

"<unnamed thread>" tid=0x0x7f55bda26730 this=0x0x7f55bd8d9e58 thread handle 0x2004 state : not waiting owns ()
  at (wrapper managed-to-native) System.IO.MonoIO.GetFileSystemEntries (string,string,int,int,System.IO.MonoIOError&) <0x00051>
  at (wrapper managed-to-native) System.IO.MonoIO.GetFileSystemEntries (string,string,int,int,System.IO.MonoIOError&) <0xffffffff>
  at System.IO.Directory.GetFileSystemEntries (string,string,System.IO.FileAttributes,System.IO.FileAttributes) <0x001df>
  at System.IO.Directory.GetDirectories (string,string) <0x0001b>
  at System.IO.Directory.GetDirectories (string) <0x00017>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x00063>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (string) <0x0008f>
  at Docky.Services.GLibFileExtension.SubDirs (GLib.File,bool) <0x0004b>
  at Docky.Services.GLibFileExtension.SubDirs (GLib.File) <0x00013>
  at Docky.Windowing.WindowMatcher.<BuildDesktopFilesList>m__B (string) <0x00017>
  at System.Linq.Enumerable/<CreateSelectManyIterator>c__Iterator12`2<object, object>.MoveNext () <0x0014a>
  at System.Linq.Enumerable/<CreateUnionIterator>c__Iterator1C`1<object>.MoveNext () <0x00223>
  at System.Linq.Enumerable/<CreateSelectManyIterator>c__Iterator12`2<object, object>.MoveNext () <0x003dd>
  at System.Linq.Enumerable/<CreateSelectIterator>c__Iterator10`2<object, object>.MoveNext () <0x00159>
  at System.Collections.Generic.List`1<object>.AddEnumerable (System.Collections.Generic.IEnumerable`1<object>) <0x00082>
  at System.Collections.Generic.List`1<object>..ctor (System.Collections.Generic.IEnumerable`1<object>) <0x0008b>
  at System.Linq.Enumerable.ToList<object> (System.Collections.Generic.IEnumerable`1<object>) <0x0003b>
  at Docky.Windowing.WindowMatcher.BuildDesktopFilesList () <0x00257>
  at Docky.Windowing.WindowMatcher..ctor () <0x0004f>
  at Docky.Windowing.WindowMatcher..cctor () <0x00047>
  at (wrapper runtime-invoke) object.runtime_invoke_void (object,intptr,intptr,intptr) <0xffffffff>
  at Docky.Items.FileApplicationProvider..ctor () <0xffffffff>
  at Docky.Items.FileApplicationProvider..ctor () <0x000b0>
  at Docky.Interface.DockPreferences.BuildItemProviders () <0x0007f>
  at Docky.Interface.DockPreferences..ctor (string) <0x001c7>
  at Docky.DockController.CreateDocks () <0x00077>
  at Docky.DockController.Initialize () <0x000a3>
  at Docky.Docky.Main (string[]) <0x00267>
  at (wrapper runtime-invoke) Docky.Docky.runtime_invoke_void_object (object,intptr,intptr,intptr) <0xffffffff>