In addition to what you've already done, right-click the desktop, point to 'Arrange Icons By' and make sure that 'Lock Web Items on Desktop' is NOT checked.
I'm having this problem with the Desktop icons having this outline around them and their name tags. The colour is based around the chosen colour for the desktop, but i have a picture set as my desktop not a base colour so I shouldnt see the outline.
I'm running a 1.6 mobile laptop, with a radeon 9000 mobile 64 MB. Windows xp home edition, and I dont remeber having this problem awhile ago.
I've tried removing icon label drop shadows in the system proberties menu under visual preformace, but it didnt do anything.
Any ideas. Thanks

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