DISCLAIMER! This comment pertains to TeamViewer software ... for those of you not familiar with it, TeamViewer is a remote access product, it is not an SL viewer and has nothing to do with SL or Linden Labs. However, a lot of people use it so I'm sure they will be interested to fix this compatability problem.
THE SOLUTION : disable the "quick connect" feature in TeamViewer. QuickConnect is the feature that puts a "<=>" button on all your windows so that you can share them easily. If you never use this feature then you can just disable it entirely. Or you can disable it just for secondlife.exe. In TeamViewer, go to extras > options > advanced > show advanced options ... then click on "configure" for QuickConnect button. You can disable it there.
Thankyou Brendan for identifying TeamViewer as the source of the problem, I literally spent hours trying to figure out why the new SL Viewer 2.7 was failing, I even logged a support ticket. I must remember to close that ticket now!