You are correct that doing a fresh install by manually deleting the entire existing TS folder C:\Truespace761 and running the ts761B8.exe setup program does eliminate the problem.
Only thing is I lose all of my exiting set up that I had so I had to investigate and find what was causing the problem. By slowing adding directories and files to the new installation
and checking each time to see if TS still runs I was able to identify the problem. It was the additional files in the C:\TS761\ts\Shaders\Material folder that was causing a problem.
Since all of these shaders are for the model side of truespace, I don't really need them as I use ts workside. I did not try to determine exactly which file or files is causing the problem
as the existing directory has a lot of files, but if I feel like doing this later I may.
See Images of the new installation and my existing installation for comparison. The existing has lots and lots more files in it.