Simply reboot into Safe Mode, the reboot back into "normal" Windows.. It will usually reset the iconcache and allow the icons to look normal again:
How To Start In 'Safe Mode'
Hope this helps.
I've been using XP SP3 for some time now with no problems, but it seems that since the last update (about 10-12 days ago?) I can no longer change the icons on my desktop shortcuts and they have mostly reverted to a generic icon (looks like a document). Also, all of the icons in my favorites list have also reverted. If I right-click on a shortcut icon and click properties, I can get to the "Change Icon" button and go throuhg the steps without any error message, etc. However, the icon simply does not change to the one I select, neither the "preloaded" windows icons or any custom one I browse to. It used to work fine, but now no matter what I enter, it reverts to some cryptic file name (%system%\\%system32%\something.dll or something like that). The only other change I have made recently was to change the size and spacing of my icons. Any help or ideas would be appreciated.