If I have PWSafe (v3.07) running and I try to use an InfoCard, CardSpace will pop up but then abend shortly, leaving IE7 hung.
I then have to bounce the Windows CardSpace service to free up the browser (or wait 15 minutes for the icardagt.exe to exit.)
See the thread in http://forums.microsoft.com/MSDN/ShowPost.aspx?PostID=1992010&SiteID=1 (CardSpace exits after a few seconds and leaves IE7 hung) for much more detail about this.
I unchecked the System tab option in PWSafe for "Put in System Tray" and just minimized PWSafe. The problem still occurs even though PWSafe is minimized!