I am able to create a new custom faction and play with it without a crash. I wonder if it has to do with a specific ability that is being picked with the custom faction? If you could tell me exactly what options you pick when creating the custom faction that causes the crash I'm happy to try to repro it. Or if you want to attach the xml (from your my games/fallen enchantress/races/ directory) from your custom faction i'd love to check it out.
I am running the 1.11 patch (linked at the top of the support forum), so that may be worth trying if you are having this issue.