Eclipse:
Version: 3.1.0
Build id: I20050219-1500
This is the first problem, this is not the final GA release of Eclipse 3.1. MyEclipse 4.0 Milestone 2 is only compatible with the GA release of Eclipse 3.1, please download the 3.1 SDK and unzip it to a new location, then re-run the MyEclipse install against this new Eclipse build. Then adjust your shortcut to include -clean and point it at your old workspace.
It looks like I have WTP 1.0…the only other plugin I have is P4.
Do you have wtp plugins under your <eclipse>\plugins dir, or are you referring to the ones in the MyEclipse install? If you have WTP installed under Eclipse, this will cause many conflicts with MyEclipse as we build ontop of the WTP platform, so by installing incompatible versions you are going to cause MYEclipse to act irradically and die.
I would point out that the freeze up your are experiencing was liekly reintroduced by WTP when you installed it.