I don't think the code in the steps to reproduce the problem will reproduce the problem because of the clear all command.

This code will reproduce the problem:

LOCAL i, oTestobject as custom, sClassName as string
LOCAL outputFile as String 
outputFile = "c:\ouput.txt"

oTestobject = CREATEOBJECT("Custom")
FOR i = 1 TO 200000
	STRTOFILE(ALLTRIM(STR(i)),"outputFile",0)
	sClassName = SYS(2015)
	oTestobject.addobject(sclassName, "custom")
	oTestobject.RemoveObject(sclassname)
ENDFOR 

I think the problem is VFP only allow 64366 object name that is stored in an internal table. When you exceed this level you get the to many names used exception dialog. After this dialog VFP starts acting really goofy and you need to quit and restart. I think this resets the internal table.

It isn't fixed in VFP7.0 but it is fix in VFP 8.0