WS-FTP LE 5.06 has not been a "supported" version since 2003....the new version is 12.4....I wonder, have you done a uninstall and reinstall of 5.06...I am using Windows 7 and have version 6 installed on it and it works fine for me...you can find some old versions on OldVersions.com...but, I would suggest using the FREE new version of WS-FTP LE, you can read all about it on this thread..
http://www.filetransferplanet.com/forums/topic/ws-ftp-le-is-back-and-still-free