I was having the same problem for over a month. I uninstalled 11.02 completely and installed 11.04 and the problem was resolved until another recent update to Windows, and it started behaving the same way again. I couldn't navigate in Windows explorer or open File dialogs.
I also tried running the purge and reinstalling 11.04 and it did not resolve the issue.
Respectfully, Basj, asking us to revert to Windows 11 current release is asking us to reinstall our operating systems just to run Windowblinds. That's not going to happen.
Based on another post, I was able to uninstall the last Windows Update (KB5052090) and it's working again.
It's understandable that you don't officially support these builds, but we know that you will need to fix it eventually since this issue likely go on into officially released builds.
Please just keep us posted.
Thank you!