Make a new Windows user and try it there. If success, transfer your files and settings and move over permanently.
That's the recommended solution for corrupted user profiles, which could be the case here.
http://support.microsoft.com/kb/811151 tells how.
Operating System System Model
Windows XP Home Edition Service Pack 3 (build 2600) Enclosure Type: Desktop
Processor a Main Circuit Board b
2.40 gigahertz Intel Pentium 4
8 kilobyte primary memory cache
512 kilobyte secondary memory cache Board: First International Computer, Inc. VC19 PCB 1.x
Bus Clock: 133 megahertz
BIOS: Phoenix Technologies, LTD 6.00 PG 09/26/2002
Drives Memory Modules c,d
580.36 Gigabytes Usable Hard Drive Capacity
260.12 Gigabytes Hard Drive Free Space
HL-DT-ST DVDRAM GSA-4167B [CD-ROM drive]
Memorex 52MAXX 2452AJ [CD-ROM drive]
3.5" format removeable media [Floppy drive]
Maxtor 6L100P0 [Hard drive] (100.26 GB) -- drive 2, s/n L207NW5H, rev BAH41G10, SMART Status: Healthy
WDC WD1600JB-00EVA0 [Hard drive] (160.04 GB) -- drive 1, s/n WD-WMAEK2859669, rev 15.05R15, SMART Status: Healthy
WDC WD3200AAJB-00J3A0 [Hard drive] (320.07 GB) -- drive 0, s/n WD-WCAV21341944, rev 01.03E01, SMART Status: Healthy 1024 Megabytes Installed Memory
Slot 'DIMM1' has 512 MB
Slot 'DIMM2' has 512 MB
Local Drive Volumes
c: (NTFS on drive 2) 100.25 GB 15.97 GB free
g: (NTFS on drive 1) 4.85 GB 2.76 GB free
h: (NTFS on drive 1) 155.19 GB 13.50 GB free
i: (NTFS on drive 0) 320.07 GB 227.89 GB free
When I right click on the desktop and select properties and click the desktop tab, I can't change the background picture (BTW, I just want a solid color background). I can click the color flydown and apply a new color, but that doesn't affect the current desktop. On reboot, the rebooting, the new background color appears until late in the boot process when the background whites out.