I'm having a similar problem. Thing is that all of my pictures in "my
pictures" are showing up as available backgrounds. This started happening
the other day, and now when I right click on the desktop nothing happens or i
just get the hourglass icon. once that happens, nothing can reafresh the
display, windows leave trails, the taskbar doesn't work. THe only solution i
have is to opent he task manager, end the explorer.exe process and then
restart it under new task.