The described effect happens both in gnome desktop and gnome classic desktop.

The bug happens with my desktop, created  in F23), but similarly  with a fresh created user in F24!

I found out that this effect is independent from the home directory: It happens even if I try the change the icon of some other directory contents(not on the desktop, but in some other nautilus window).

I have the same issue with a fresh Fedora 24 install using Gnome

gnome-shell-3.20.3-2.fc24.x86_64
nautilus-3.20.1-1.fc24.x86_64

I right click a folder (either the icon in the parent or white space in the folder) and select Properties and click the Icon box.

Nautilus brings up an Open dialog

Does not respond to any mouse or keyboard activity with the exception of ESC.

Same issue with a fresh install Fedora 24 in Gnome

gnome-shell-3.20.3-3.fc24.x86_64
nautilus-3.20.1-1.fc24.x86_64

Nautilus crashes every time when right clicking on any file or folder, then selecting properties, then clicking on the icon under the Basic tab. The "Select Custom Icon" opens and then it freezes/crashes that window. However, I can open another Nautilus window without any problem, but I can never change the icon of the file or folder because it crashes every time.

This occurs on whenever attempting to change the icon image for a folder/shortcut/etc using the right-click/context menu > "Properties" > "Basic" tab > click on icon to choose a different icon.

A file selector window appears, but it becomes completely unresponsive. In nautilus 3.20 at least, other file/folder operations still appear to be functional; eg: opening a different nautilus file window. The only means of killing the unresponsive file selector window is to press the escape key while the window is selected, or alternatively to run the following from a terminal:

killall nautilus && nautilus

The bug appears to have been solved in nautilus 3.22 as per this link:
https://m.reddit.com/r/gnome/comments/4rf6sj/change_icon_folder_on_nautilus_320/

The link for the committed fix as referred to in the above thread is:
https://git.gnome.org/browse/nautilus/commit/src/nautilus-properties-window.c?id=6df5972a6b3d472d64dd741626424a3332d2fd17

If the above fix could be applied to nautilus 3.20 it would help significantly.

Also suffering from the same thing.  An upstream patch that fixes the problem is available here:

https://git.gnome.org/browse/nautilus/commit/?id=6df5972

Unfortunately, every time I try to build Nautilus I find I have to put this into the proper file, and then mess with other files and permissions just to get it to compile.

Then, after compiling and a brief reprieve after installation, I receive an update and have to start the entire process over again.

The above patch at the end of the link becoming part of official Fedora patches for the nautilus package would save the rest of my hair.  And, we wouldn't have to wait until gnome 3.22.

Please help us.

By the way, the window and desktop don't actually freeze, at least not in my case.  In my case, only the Escape key will free the dialog and close it if the code is left as is and the dialog is open.  Unfortunately, the dialog won't work so that we can change icons if the line of code isn't added as in my above comment.  I just built new packages for my system with line of code and all is working as it should be again--until the next update without the new code, that is. ;-)

But, try hitting the Escape button to see if it closes the dialog on other machines besides mine.

I have the same issue. Esc also works for me. Is there another way to change the icon until a fix becomes available?

I have the same issue/bug and escape also works for me :P

Seems to be solved in F25