When you installed SF 1.7.0, it did not clear out all of the 1.6.0 assemblies (which can be caused by several things). Before you get much deeper, manually remove any 1.6.0 references then reload the 1.7.0 build. Make sure that all of your files get updated to the 1.7.0 version otherwise you will have other weirdness.
Second, download the SF source code, build it in debug mode, which should also update your GAC references. THEN, get out of VS. Open VS back up and you should have SF DLLs in debug mode which will allow you to debug and break on any exception allowing you to trace and see where the point of failure is, look at a stack trace, etc.
I really think that you are dealing with an issue within your code. For example, something is causing the grid to re-evaluate the bound data source which is causing the error.
First, before you go crazy, just override the OnFormClosing method of the form, and manually remove the data source form the grid:
MyGrid.DataSource = null;
If you are using VB.NET then replace the null with Nothing. That should prevent anything from trying to evaluate the BBS on the form close.