I ran into the infamous message, "Firefox is already running, but is not responding. To open a new window, you must first close the existing Firefox process, or restart your system."
I had no trouble starting a single instance of Firefox Portable, but once Firefox was running, if I did something like
Start/Run/k:\Portable\FirefoxPortable.exe http://www.google.com/ig
intending for it to open the link in the existing Firefox window, I got the message. I had set "AllowMultipleInstances=true" in FirefoxPortable.ini.
In *my* case, setting it to "AllowMultipleInstances=false" made the error go away. I was running FP2-RC3. I post this info in case someone else can use the info.
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Actually, the special environment setting may no longer work with Firefox 2.0... at least with multiple instances of FF 2.0. I haven't fully tested it and have never recommended it for normal use, anyway. Perhaps I'll simply drop this feature since it no longer works right and barely anyone uses it.
Sometimes, the impossible can become possible, if you're awesome!