The one thing I have not heard is why everything works normally without Fences and then it no longer works with Fences. JcRabbit, explain that please, rather than accusing me of not wanting to solve the problem (particularly as I have enough of solving problems when coding and debugging).
Sorry if you felt I was accusing you of something, I was just trying to be witty and re-direct your focus to where it should really be. 
It's only by experimenting to see what happens that we might get a clue to the cause. Right now I have no idea, you have no idea, and Sean probably has no idea either. You simply assume - with some reason to do so, granted - that it's caused by Fences because it stops happening when Fences is disabled, and you might be right - but you might also be wrong. Things with computers are rarely as linear as they seem - sometimes it's a weird interaction with 3rd party applications.
And this is why I asked you to re-direct your focus. 
What may be occurring is that the desktop does not get the focus when using the finger because of Fences. Often if the desktop does not get the focus Nexus will not respond, even with the mouse, with or without Fences.
See, this assumption is not correct - Nexus does not need to have the focus (or for the desktop to have the focus) to respond to edge bumps. It constantly monitors the position of the mouse and pressed mouse buttons on a system-wide basis, and that is what it responds to.
Here's a clue already, the fact that this might happen even when Fences is not running.
I suppose you could change/block what information Nexus (and other applications) gets with a global hook, but I am not sure about it or even if Fences does anything like that.