Well this is quite an old problem caused by a trojan a long time ago. three years or so. In any case it left my desktop background icons unable to have tranparency. Heres a screenshot.
http://i198.photobucket.com/albums/aa290/kylethedarkn/ssfordani.jpg
Disreguard the Skin and Sidebar because they are not the cause of this. Also ignore the emulators.
Oh and computer is a emachines(dont buy one they stink) running Windows XP Professional.