The presence of a viscous boundary layer under the solid crust of a neutron star dramatically increases the viscous damping rate of the fluid r-modes. We improve previous estimates of this damping rate by including the effect of the Coriolis force on the boundary-layer eigenfunction and by using more realistic neutron-star models. If the crust is assumed to be perfectly rigid, the gravitational radiation driven instability in the r-modes is completely suppressed in neutron stars colder than about 1.5 × 108 K. Energy generation in the boundary layer will heat the star, and will even melt the crust if the amplitude of the r-mode is large enough. We solve the heat equation explicitly (including the effects of thermal conduction and neutrino emission) and find that the r-mode amplitude needed to melt the crust is αc≈ 5 × 10-3 for maximally rotating neutron stars. If the r-mode saturates at an amplitude larger than αc, the heat generated is sufficient to maintain the outer layers of the star in a mixed fluid-solid state analogous to the pack ice on the fringes of the Arctic Ocean. We argue that in young, rapidly rotating neutron stars this effect considerably delays the formation of the crust. By considering the dissipation in the ice flow, we show that the final spin frequency of stars with r-mode amplitude of order unity is close to the value estimated for fluid stars without a crust.