So one of my emails contain a virus. Whenever the desktop service attempts to sync it to disk, AVG freaks out, denies access to the file and asks me if I want to heal, remove or ignore.
All normal, except the desktop service dies on the stop when this occurs.
Apparently, it doesn't deal well with the error condition that occurs.
The only way I've found to "fix this" is to tell AVG Resident Shield to ignore "c:\zimbra\".
Viruses in emails being a somewhat common occurrence, this is likely to happen to other folks.