Are you using this as a standalone? Or, as an ARA2 plugin inside of Cubase. I have seen this freezing many times. Most often in standalone mod. Sometimes the freeze will process through to make the program usable without restarting. Sometimes not. I know that is not helpful. But I can look at this a little more.
ah. I looked at your pic. I have not seen the rectangle that is seen in your pic. Perhaps a video card driver issue?