Meanwhile, Israeli helicopters fired missiles in the northern Gaza town of Beit Hanoun on Thursday, injuring several people.
The army said it had fired at least one missile at a group of militants who had planted explosives near Israeli troops operating near the town of Beit Hanoun.
The Palestinian witnesses said two missiles had been fired.
The witnesses confirmed that militants had been operating in the area. They also said youths had been throwing stones at nearby troops. At least one person in the area was armed.
The landmark court ruling meant more trouble for Prime Minister Ariel Sharon's "unilateral disengagement" from the Palestinians - his ambitious plan to complete the West Bank barrier and withdraw from the Gaza Strip by 2005.
The plan has also been complicated by the recent violence in Gaza.
Israel has been carrying out an offensive in Beit Hanoun this week to halt Palestinian rocket attacks on southern Israel. An attack earlier this week killed two Israelis, including a 3-year-old boy.
Israeli tanks also battled Palestinian gunmen Thursday in the Rafah refugee camp in southern Gaza, and local hospital officials said a 9-year-old boy was killed by Israeli gunfire. The army said militants had fired grenades and missiles at its forces. It had no information on the dead boy.
The Rafah camp was the scene of a large-scale offensive last month in which 40 Palestinians died. Israel accuses militants of smuggling weapons across the adjacent Egyptian border through underground tunnels.
Israeli forces launched a rare raid in Biblical Jericho, which CBS News Correspondent Robert Berger says is one of the quietest towns in the West Bank. The army said more than 20 wanted Palestinians were arrested, including senior militants. Assault rifles and grenades were confiscated. Israel claims sleepy Jericho has become a place of refuge for terrorists.
Also Thursday, an Israeli official said the government had turned over a list of unauthorized West Bank settlement outposts to the United States.
But U.S. Embassy spokesman Paul Patin said the action fell short of American demands to dismantle the outposts, and an Israeli newspaper said Israel was moving to legalize some of the enclaves. Patin urged Israel to fulfill its commitments.
It was the latest sign of growing U.S. impatience over the issue. Under the U.S.-backed "road map" peace plan, Israel is required to dismantle dozens of unauthorized outposts. But it has removed only a tiny number.
Palestinians view the outposts as the seeds of future settlements, which they say encroach on land where they hope to establish an independent state.
Dozens of Palestinians and Israelis were protesting Thursday near Nablus, where bulldozers are excavating the route on which a stretch of the barrier will be erected, Israel Radio reported.
The Supreme Court ruling Wednesday focused on a 25-mile section of the barrier near Jerusalem. The stretch would have separated some 35,000 Palestinians from their farmland, schools and jobs.
In all, the complex of fences, concrete walls, trenches and razor wire is to run 425 miles and is one-fourth complete. It will cost Israel about $1.56 billion. Work had been scheduled to be finished by the end of next year.
Many Israelis say the high court decision protects Palestinians while exposing Israelis to suicide bombers.
"The fence should be continuous, should be effective, and of course deal with security," said Yossi Mendelovich of the Council for the Security Fence
Government officials said the ruling would delay construction of the Jerusalem section by several months and invite further appeals regarding other sections by barrier opponents.
"We won't stop here," said Mohammed Dahla, a lawyer for the petitioners.
On Thursday, the Supreme Court froze construction of another section of the barrier being build in southern Jerusalem in response to a challenge filed by local Palestinians, a court spokeswoman said.
It was unclear whether the order was related to Wednesday's ruling.
On July 9, the world court in The Hague, Netherlands, is to issue an advisory ruling on the route of the barrier, at the request of the Palestinians.
Sharon was to discuss the fallout from the Supreme Court ruling with his defense and justice ministers Thursday.
Israel says the barrier is crucial to keep out Palestinian attackers. Palestinians say the divider, which at times dips deep into the West Bank, amounts to a land grab.
Under Sharon's plan, the barrier was to be completed by 2005, and dozens of Israeli settlements left on the "Palestinian" side would be given extra protection. On Wednesday, parliament's Finance Committee approved 150 million shekels ($33 million) for the construction of fences around these settlements.
The high court ruling was the latest complication in Sharon's "disengagement" plan, which he says will reduce friction by separating Israelis and Palestinians.
Officials also say the disengagement plan will allow Israel to retain its character as a Jewish, democratic state by redrawing boundaries to exclude non-Jewish populations with higher birth rates. Israel has stepped up activity in Gaza this week after Palestinian rocket attacks in the border town of Sderot killed an Israeli man and a 3-year-old boy.