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I only ever insert DWG files but i've just tried DXF and it worked fine.
Could be your installation or a duff DXF file.
I'm using SW2007 sp1
If you want to post your DXF file i'll give it a try.
I have a feeling my SW needed to rest up over the weekend.
I tried it this morning and it worked, It must have been tired.
Thanks for your input, file size was only 40kb.
It might crash when you insert a very complicated DXF file, if the file size is less than 200k, it should not crash