i cant reproduce the error as you appear to have it but this would probably fix the issue:
Hmm. No, it still won't let me go into the new compact mode. Seems to be a slightly different error (on startup):
MusicBee v2.1.4814.36363 (Win6.1), 7 Mar 2013 18:01:
System.NullReferenceException: Object reference not set to an instance of an object.
at #=q5kqygt8zI0MF4ZtkVvbFa2S46l6ieVaTmWz7p07Pe00=.#=q7SoEWbBp$vqdEz5vWBvgew==.#=qdcRR3bv_$hXYrosGqh$94g==(#=qD8F8ecg6sZqh7_No4InT7CfxVZRhGzu$Id$VatKEm3JFmf7kwvug$lZB69sy97uI #=qD3NDpm31Jk_6UhShDxsJow==)
at #=q5kqygt8zI0MF4ZtkVvbFa2S46l6ieVaTmWz7p07Pe00=.#=q6xTTEi1bWADaSkVjA68q1GrYq3Bdikb8NjfM7OG9Wtk=()
at #=q5kqygt8zI0MF4ZtkVvbFa2S46l6ieVaTmWz7p07Pe00=.#=qgkwziMUVlEUez4GlBSuYphuj8MRpwcn8OgAY_Jp8EKs=()
at #=q5kqygt8zI0MF4ZtkVvbFa2S46l6ieVaTmWz7p07Pe00=.#=qst7HCMdnjzo1XJ61c2mUZc_s3BFtte8HcrdNL_fWqJ8=()
at #=qSki_EbvDCqPY7mMhuL7AwDysMhsAPNZOnsxUsgOcVLGqLTjKha66RjxUGNvihleh..ctor(Point #=qAPM07$kQxD3DwXwNZXmdorQDQ$DRd3DJ782A0tfXR7Q=)
at #=ql052sY5u_Ui5dqGmlpmchFE3WiekcCyiMjHKXgPvlmE=.#=qqWwcFdN3wzAnC0LKeMDy2g9eE55Xc5Pd7FOzNOn6xqM=()
at #=qcP1K5C3DawVpZDDyA8HQz3VeM5CEfW5dkfL0i$6nfhw=.#=qGcKoMVC6LlyCY9B16k2Q_ooLKjSdJ_bhdqxDk15a65A=(Boolean #=qIIHeKaD4QJLPXPKMzI8ksg==)
at #=qcP1K5C3DawVpZDDyA8HQz3VeM5CEfW5dkfL0i$6nfhw=.OnLoad(EventArgs #=qbuAFKACycfnl35$7wxVsvg==)
at System.Windows.Forms.Form.OnCreateControl()
at System.Windows.Forms.Control.CreateControl(Boolean fIgnoreVisible)
at System.Windows.Forms.Control.CreateControl()
at System.Windows.Forms.Control.WmShowWindow(Message& m)
at System.Windows.Forms.Control.WndProc(Message& m)
at System.Windows.Forms.ScrollableControl.WndProc(Message& m)
at System.Windows.Forms.Form.WmShowWindow(Message& m)
at System.Windows.Forms.Form.WndProc(Message& m)
at #=qeLwgYzNVfo3zkrsxm2omXWn7BCXQcY2$R0R5F84SMsuQIFOFELL2jqfZFGVpmB1k.WndProc(Message& #=qSB3Slp8o8AVbkYHFdJbc7w==)
at #=qcP1K5C3DawVpZDDyA8HQz3VeM5CEfW5dkfL0i$6nfhw=.WndProc(Message& #=qs8DzRvOEFdaCc7LMNTXTEw==)
at System.Windows.Forms.Control.ControlNativeWindow.OnMessage(Message& m)
at System.Windows.Forms.Control.ControlNativeWindow.WndProc(Message& m)
at System.Windows.Forms.NativeWindow.Callback(IntPtr hWnd, Int32 msg, IntPtr wparam, IntPtr lparam)
Let me clarify:
I can open in normal window, no error.
If I try to go into new compact mode, I get an error and it doesn't work. AND if I then close MB and reopen it, I get the above error.
If I switch the settings back to normal compact mode but don't go into compact mode, the next time I open MB it goes into normal compact mode anyway, as though it had been closed that way.
If I switch the settings back to normal compact mode, go into compact mode, and then back to normal, the next time I open MB it's fine.
It may be that your new version will prevent the error, but just hasn't fixed what got "stuck" before.
Later update: I'm trying to get it fixed so that I can test whether the patch has resolved the problem. Unfortunately, a reinstall over the old one didn't solve it, and so far neither has trying to delete settings files. Don't sweat it too much, this was my test installation so as soon as I get back to that computer I'll trash the whole folder and start from scratch.