Desktop icons all have blue highlight box around text

Try right clicking on the desktop, Properites>Apperence Tab click on advanced and under item slect Icon (this is the properites box for your desktop items) and see if there is a blue background slected. You might see a blue color slected and if so click no fill or whatever is there so you dont have a blue background on the text of your icons, if applicable.

hehah good effort I know display settings can be a buggar endless typing.
ok..
Hi Lobstrosity I think what maybe causing this in fact the background colour of your monitor.
r/click the desktop>properties>desktop>COLOUR.. change that colour I hope its that one.
Give that a go.

bjctennistec: I checked the icon color and it is faded out (unselectable) with no color selected.
Merete: I tried to change the desktop color, and that did indeed change the color of the boxes, but there was not an option to remove the boxes so that they appear back as normal.  

Any other suggestions?

good good it is a start then ;)
hmm boxes lol..
ok this cannot be changed as far as I know, the only reason it is probaly standing out is the colour difference to the wallpaper/background.. also if you have one click enabled that adds a line below the text.

when "things" happen or change out of the blue for no reason one should be suspect and perform some clean up immediately. This is usually a sign and should be given attention.>>Additionally, when my system starts now, it hangs on the welcome screen for several seconds longer than usual.  

firstly delete all temp internet files. History. run a defrag.
Use cleanup disc from start all programs accessories system tools disc cleanup.
check in control panel administrative tools events applications for any errors. Profile hives is usally one that comes up.
http://www.microsoft.com/downloads/details.aspx?familyid=1B286E6D-8912-4E18-B570-42470E2F3582&displaylang=en

Process Explorer
Ever wondered which program has a particular file or directory open? Now you can find out. Process Explorer shows you information about which handles and DLLs processes have opened or loaded.
http://www.sysinternals.com/Utilities/ProcessExplorer.html

check for spyware
Please download HijackThis 1.99.1
http://www.cyberanswers.org/forum/uploads/HijackThis1991.exe
Open Hijackthis, click  scan and save a logfile to your desktop:
close it when done. Donot fix:
then copy and paste the log here >> http://www.hijackthis.de/
at the very bottom
click "Analyse", "Save"..  
then copy the URL  that links to the saved list and paste it back here.

Did you try right clicking on My Computer>Properties (or Start>Control Panel>System) then go to the Advanced Tab and press the Settings button under Performance then make sure the "Use drop shadows for icon labels on the desktop" is checked (you'll have to scroll down because it's near the bottom)?

rbspriggs:  I forgot to list that one, but yes I did maje sure "Use drop shadows" is checked (I tried unchecking and rechecking).
Merete: I downloaded and ran hijackthis, here is the log.  it doesnt look too healthy it seems...

Logfile of HijackThis v1.99.1
Scan saved at 8:26:59 AM, on 2/24/2006
Platform: Windows XP SP2 (WinNT 5.01.2600)
MSIE: Internet Explorer v6.00 SP2 (6.00.2900.2180)

Running processes:
C:\WINDOWS\System32\smss.exe
C:\WINDOWS\system32\winlogon.exe
C:\WINDOWS\system32\services.exe
C:\WINDOWS\system32\lsass.exe
C:\WINDOWS\system32\svchost.exe
C:\WINDOWS\System32\svchost.exe
C:\WINDOWS\system32\spoolsv.exe
C:\WINDOWS\Explorer.EXE
C:\Program Files\Common Files\Real\Update_OB\realsched.exe
C:\Program Files\Creative\SBAudigy2\Surround Mixer\CTSysVol.exe
C:\WINDOWS\system32\CTHELPER.EXE
C:\Program Files\Creative\SBAudigy2\DVDAudio\CTDVDDet.EXE
C:\WINDOWS\BCMSMMSG.exe
C:\Program Files\Roxio\Easy CD Creator 5\DirectCD\DirectCD.exe
C:\WINDOWS\system32\rundll32.exe
C:\Program Files\Microsoft Hardware\Mouse\point32.exe
C:\Program Files\Microsoft IntelliType Pro\type32.exe
C:\Program Files\Java\jre1.5.0_06\bin\jusched.exe
C:\Program Files\D-Tools\daemon.exe
C:\Program Files\iTunes\iTunesHelper.exe
C:\PROGRA~1\Grisoft\AVGFRE~1\avgcc.exe
C:\Program Files\QuickTime\qttask.exe
C:\WINDOWS\system32\ctfmon.exe
C:\PROGRA~1\MUSICM~1\MUSICM~1\MMDiag.exe
C:\Program Files\Sony Corporation\Image Transfer\SonyTray.exe
C:\Program Files\Portrait Displays\MagicTune\DTHtml.exe
C:\Program Files\MUSICMATCH\MUSICMATCH Jukebox\mim.exe
C:\Program Files\NETGEAR\MA111 Configuration Utility\wlancfg4.EXE
C:\WINDOWS\System32\Ati2evxx.exe
C:\PROGRA~1\Grisoft\AVGFRE~1\avgamsvr.exe
C:\PROGRA~1\Grisoft\AVGFRE~1\avgupsvc.exe
C:\PROGRA~1\Grisoft\AVGFRE~1\avgemc.exe
C:\WINDOWS\System32\CTsvcCDA.exe
C:\Program Files\Portrait Displays\MagicTune\dtsrvc.exe
C:\Program Files\Network Monitor\netmon.exe
C:\WINDOWS\System32\svchost.exe
C:\WINDOWS\System32\MsPMSPSv.exe
C:\Program Files\iPod\bin\iPodService.exe
C:\Program Files\Internet Explorer\iexplore.exe
C:\Program Files\HijackThis 1.99.1\HijackThis.exe

R1 - HKCU\Software\Microsoft\Internet Explorer\Main,Default_Page_URL = http://start.earthlink.net/
R1 - HKCU\Software\Microsoft\Internet Explorer\Main,Default_Search_URL = http://www.earthlink.net/partner/more/msie/button/search.html
R0 - HKCU\Software\Microsoft\Internet Explorer\Main,Start Page = http://my.ebay.com/ws/eBayISAPI.dll?MyeBay&ssPageName=H%3AH%3AMYEBAY%3AUS
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Default_Page_URL = http://www.dellnet.com
R0 - HKLM\Software\Microsoft\Internet Explorer\Main,Start Page = http://www.dellnet.com
R1 - HKCU\Software\Microsoft\Windows\CurrentVersion\Internet Settings,ProxyOverride = http://localhost;
F2 - REG:system.ini: UserInit=userinit.exe
O1 - Hosts: 81.211.105.6 www.0190-dialer.com
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O1 - Hosts: 81.211.105.6 www3.smutserver.com
O1 - Hosts: 81.211.105.6 www3.xfreehosting.com
O1 - Hosts: 81.211.105.6 www3.zpornstars.com
O1 - Hosts: 81.211.105.6 www30.smutserver.com
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O1 - Hosts: 81.211.105.6 www4.kinghost.com
O1 - Hosts: 81.211.105.6 www4.smutserver.com
O1 - Hosts: 81.211.105.6 www4.xfreehosting.com
O1 - Hosts: 81.211.105.6 www4.zpornstars.com
O1 - Hosts: 81.211.105.6 www5.kinghost.com
O1 - Hosts: 81.211.105.6 www5.smutserver.com
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O1 - Hosts: 81.211.105.6 www9.smutserver.com
O1 - Hosts: 81.211.105.6 www.bigmovies.com
O1 - Hosts: 81.211.105.6 www.bigpornvideos.com
O1 - Hosts: 81.211.105.6 www.big-xxx-movies.com
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O1 - Hosts: 81.211.105.6 www.cyberxxxhost.com
O1 - Hosts: 81.211.105.6 www.dialcom.com
O1 - Hosts: 81.211.105.6 www.eldererotica.tv
O2 - BHO: AcroIEHlprObj Class - {06849E9F-C8D7-4D59-B87D-784B7D6BE0B3} - C:\Program Files\Adobe\Acrobat 6.0\Reader\ActiveX\AcroIEHelper.dll
O2 - BHO: {BCBF738C-4891-4B9A-959A-C6BF7F608C3A} - {29F7B7FA-ADC8-48EA-9E1C-EA87A05AE642} - C:\Program Files\NaturalReader\FreeVersion\sbb.dll (file missing)
O2 - BHO: SSVHelper Class - {761497BB-D6F0-462C-B6EB-D4DAF1D92D43} - C:\Program Files\Java\jre1.5.0_06\bin\ssv.dll
O2 - BHO: (no name) - {C5AF2622-8C75-4dfb-9693-23AB7686A456} - C:\WINDOWS\DH.dll (file missing)
O3 - Toolbar: (no name) - {BA52B914-B692-46c4-B683-905236F6F655} - (no file)
O3 - Toolbar: Natural Voice Reader - {BCBF738C-4891-4B9A-959A-C6BF7F608C3A} - C:\Program Files\NaturalReader\FreeVersion\NVRIEBar.dll (file missing)
O4 - HKLM\..\Run: [ConMgr.exe] "C:\Program Files\EarthLink 5.0\conmgr.exe"
O4 - HKLM\..\Run: [UpdReg] C:\WINDOWS\UpdReg.EXE
O4 - HKLM\..\Run: [TkBellExe] "C:\Program Files\Common Files\Real\Update_OB\realsched.exe" -osboot
O4 - HKLM\..\Run: [PRONoMgr.exe] C:\Program Files\Intel\NCS\PROSet\PRONoMgr.exe
O4 - HKLM\..\Run: [CTSysVol] C:\Program Files\Creative\SBAudigy2\Surround Mixer\CTSysVol.exe
O4 - HKLM\..\Run: [CTHelper] CTHELPER.EXE
O4 - HKLM\..\Run: [CTDVDDet] C:\Program Files\Creative\SBAudigy2\DVDAudio\CTDVDDet.EXE
O4 - HKLM\..\Run: [BCMSMMSG] BCMSMMSG.exe
O4 - HKLM\..\Run: [ATIPTA] C:\Program Files\ATI Technologies\ATI Control Panel\atiptaxx.exe
O4 - HKLM\..\Run: [ATIModeChange] Ati2mdxx.exe
O4 - HKLM\..\Run: [AsioReg] REGSVR32.EXE /S CTASIO.DLL
O4 - HKLM\..\Run: [AdaptecDirectCD] "C:\Program Files\Roxio\Easy CD Creator 5\DirectCD\DirectCD.exe"
O4 - HKLM\..\Run: [BluetoothAuthenticationAgent] rundll32.exe bthprops.cpl,,BluetoothAuthenticationAgent
O4 - HKLM\..\Run: [IntelliPoint] "C:\Program Files\Microsoft Hardware\Mouse\point32.exe"
O4 - HKLM\..\Run: [type32] "C:\Program Files\Microsoft IntelliType Pro\type32.exe"
O4 - HKLM\..\Run: [SunJavaUpdateSched] C:\Program Files\Java\jre1.5.0_06\bin\jusched.exe
O4 - HKLM\..\Run: [MimBoot] C:\PROGRA~1\MUSICM~1\MUSICM~1\mimboot.exe
O4 - HKLM\..\Run: [DAEMON Tools-1033] "C:\Program Files\D-Tools\daemon.exe"  -lang 1033
O4 - HKLM\..\Run: [webHancer Survey Companion] "C:\Program Files\webHancer\Programs\whSurvey.exe"
O4 - HKLM\..\Run: [iTunesHelper] "C:\Program Files\iTunes\iTunesHelper.exe"
O4 - HKLM\..\Run: [AVG7_CC] C:\PROGRA~1\Grisoft\AVGFRE~1\avgcc.exe /STARTUP
O4 - HKLM\..\Run: [QuickTime Task] "C:\Program Files\QuickTime\qttask.exe" -atboottime
O4 - HKCU\..\Run: [CTFMON.EXE] C:\WINDOWS\system32\ctfmon.exe
O4 - HKCU\..\Run: [tskinf] C:\WINDOWS\system32\tskinf.exe
O4 - HKCU\..\Run: [DHaxi.exe] C:\WINDOWS\system32\DHaxi.exe
O4 - Global Startup: Adobe Gamma Loader.lnk = C:\Program Files\Common Files\Adobe\Calibration\Adobe Gamma Loader.exe
O4 - Global Startup: Free NaturalReader.lnk = C:\Program Files\NaturalReader\FreeVersion\FreeReader.exe
O4 - Global Startup: Image Transfer.lnk = ?
O4 - Global Startup: MA111 Configuration Utility.lnk = C:\Program Files\NETGEAR\MA111 Configuration Utility\wlancfg.exe
O4 - Global Startup: MagicTune.lnk = C:\Program Files\Portrait Displays\MagicTune\DTHtml.exe
O4 - Global Startup: Microsoft Office.lnk = C:\Program Files\Microsoft Office\Office\OSA9.EXE
O6 - HKCU\Software\Policies\Microsoft\Internet Explorer\Control Panel present
O9 - Extra button: (no name) - {08B0E5C0-4FCB-11CF-AAA5-00401C608501} - C:\Program Files\Java\jre1.5.0_06\bin\ssv.dll
O9 - Extra 'Tools' menuitem: Sun Java Console - {08B0E5C0-4FCB-11CF-AAA5-00401C608501} - C:\Program Files\Java\jre1.5.0_06\bin\ssv.dll
O9 - Extra button: AIM - {AC9E2541-2814-11d5-BC6D-00B0D0A1DE45} - C:\Program Files\AIM\aim.exe
O9 - Extra button: PartyPoker.com - {B7FE5D70-9AA2-40F1-9C6B-12A255F085E1} - C:\Program Files\PartyPoker\IEExtension.dll
O9 - Extra 'Tools' menuitem: PartyPoker.com - {B7FE5D70-9AA2-40F1-9C6B-12A255F085E1} - C:\Program Files\PartyPoker\IEExtension.dll
O9 - Extra button: Real.com - {CD67F990-D8E9-11d2-98FE-00C0F0318AFE} - C:\WINDOWS\System32\Shdocvw.dll
O9 - Extra button: Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O9 - Extra 'Tools' menuitem: Windows Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O15 - Trusted Zone: http://click.getmirar.com (HKLM)
O15 - Trusted Zone: http://click.mirarsearch.com (HKLM)
O15 - Trusted Zone: http://redirect.mirarsearch.com (HKLM)
O16 - DPF: {1239CC52-59EF-4DFA-8C61-90FFA846DF7E} (Musicnotes Viewer) - http://www.musicnotes.com/download/mnviewer.cab
O16 - DPF: {4AD73894-A895-4FC2-B233-299867E08753} (Cadwkzctl Object) - http://apps.deskwizz.com/ax/adwerkz.cab
O16 - DPF: {4ED9DDF0-7479-4BBE-9335-5A1EDB1D8A21} - http://download.mcafee.com/molbin/shared/mcinsctl/en-us/4,0,0,81/mcinsctl.cab
O16 - DPF: {4F1E5B1A-2A80-42CA-8532-2D05CB959537} (MSN Photo Upload Tool) - http://by103fd.bay103.hotmail.msn.com/resources/MsnPUpld.cab
O16 - DPF: {70BA88C8-DAE8-4CE9-92BB-979C4A75F53B} (GSDACtl Class) - https://www.gamespyid.com/alaunch.cab
O16 - DPF: {886DDE35-E585-11D0-A707-000000521958} - http://69.56.176.76/webplugin.cab
O16 - DPF: {8A0DCBDB-6E20-489C-9041-C1E8A0352E75} (Mirar_Dummy_ATS1 Class) - http://awbeta.net-nucleus.com/FIX/WinATS.cab
O16 - DPF: {A8F2B9BD-A6A0-486A-9744-18920D898429} (ScorchPlugin Class) - http://www.sibelius.com/download/software/win/ActiveXPlugin.cab
O16 - DPF: {BCC0FF27-31D9-4614-A68E-C18E1ADA4389} - http://download.mcafee.com/molbin/shared/mcgdmgr/en-us/1,0,0,19/mcgdmgr.cab
O16 - DPF: {D719897A-B07A-4C0C-AEA9-9B663A28DFCB} (iTunesDetector Class) - http://ax.phobos.apple.com.edgesuite.net/detection/ITDetector.cab
O17 - HKLM\System\CCS\Services\Tcpip\..\{D5FE529F-46C7-41DB-8F45-A790F2555866}: NameServer = 24.169.241.50,24.169.241.25
O23 - Service: Ati HotKey Poller - Unknown owner - C:\WINDOWS\System32\Ati2evxx.exe
O23 - Service: AVG7 Alert Manager Server (Avg7Alrt) - GRISOFT, s.r.o. - C:\PROGRA~1\Grisoft\AVGFRE~1\avgamsvr.exe
O23 - Service: AVG7 Update Service (Avg7UpdSvc) - GRISOFT, s.r.o. - C:\PROGRA~1\Grisoft\AVGFRE~1\avgupsvc.exe
O23 - Service: AVG E-mail Scanner (AVGEMS) - GRISOFT, s.r.o. - C:\PROGRA~1\Grisoft\AVGFRE~1\avgemc.exe
O23 - Service: Creative Service for CDROM Access - Creative Technology Ltd - C:\WINDOWS\System32\CTsvcCDA.exe
O23 - Service: Portrait Displays Display Tune Service (DTSRVC) - Unknown owner - C:\Program Files\Portrait Displays\MagicTune\dtsrvc.exe
O23 - Service: InstallDriver Table Manager (IDriverT) - Macrovision Corporation - C:\Program Files\Common Files\InstallShield\Driver\11\Intel 32\IDriverT.exe
O23 - Service: iPodService - Apple Computer, Inc. - C:\Program Files\iPod\bin\iPodService.exe
O23 - Service: Macromedia Licensing Service - Unknown owner - C:\Program Files\Common Files\Macromedia Shared\Service\Macromedia Licensing.exe
O23 - Service: Intel NCS NetService (NetSvc) - Intel(R) Corporation - C:\Program Files\Intel\NCS\Sync\NetSvc.exe
O23 - Service: Network Monitor - Unknown owner - C:\Program Files\Network Monitor\netmon.exe

Lobstrosity here is the results of your hijack this logs
http://www.hijackthis.de/index.php#anl

run hijackthis again and fix the the nasties.

then download
ewido anti-malware download  and run it..
http://www.ewido.net/en/download/

hijackthis analysed logs soorry yes there a few nasties suggested for clean up..

http://www.hijackthis.de/logfiles/030473951cdb46bcefc9a452e8882aad.html

OOPS!
Hopefully I haven't seriously messed up or if I have there is a way to fix whatever I may have done...I misunderstood using hijackthis  and started fixing the 'nasties' like you recommended, but I didn't see that some things were nasty and somethings were not.  Instead, I checked everything in the list and clicked fix.  I made it most of the way through the whole list before I realized that I was making a mistake.  Before I mess something else up, what should I do now?

I'm guessing I should click everything in backups and restore them all, then start again (this time fixing only nasties!) but I think I should ask first so I don't mess anything up further...

update: i restored everything that was fixed through hijackthis, rescanned and then fixed all the nasties.  I then installed and ran ewido which cleaned a lot of stuff.  

I am still experienceing the original problems though of the blue highlight boxes around all the desktop icons and a several second delay on the welcome screen when windows starts.

Could be associated with the drivers for the video card.
Is windows using a theme r/click the desktop properties themes, or even try adding a themechange it from the list of themes.
Have you ever installed uxtheme I think its called it is this little program inserted into system resources themes and then you can run other themes that windowsxp would not normally allow before.

I am still not sure if this an actual problem or if it is simply a theme you donot like.
There is always a colour surround the text under icons. As in a box. You already know how to change this colour. As for the text itself, that can normally be changed in the dekstop appearance fonts.

With the few seconds dealy when loading:
As your computer ages and the regestry fills with old edits using for example regestry mechanic to clean out old and compact the regestry can speed it up. Or formatting once a year is good too.
If it is only a few seconds longer cant see why that is a problem if it was hanging for enormously lenghty periods then it maybe a damaged wav or some other programs loading.

If you want to try to speed up the windows wellcome screen r/click my computer/properties/advanced/startup and recovery/edit/and change the 30 secs to 6secs save the  changes.  ok ok exit
be very careful doing this if you change the actual boot.ini incorrectly your machine will be non bootbale.

try a reset to a date you knew your computer was working fine.

Here is snapshot of a desktop using a theme but for the purpoes to compare how is your different?
http://windowsxp2002.tripod.com/images/Windows%20XP%20Desktop.JPG
http://www.stardock.com/products/odnt/wb-oct05.jpg

Windows XP Tutorial - The Windows XP desktop & icons
http://www.helpwithpcs.com/courses/windows-xp-tutorial-desktop.htm

I found the culprit for the icon issue, in R-click desktop>properties>desktop>customize desktop>web,  there was a webpage selected that was apparently added by adware.  by deleteing that, my icons reverted to normal (no blue boxes!)  hooray!  On the down side I still have the loading issue.  It reaches the windows welcome screen, plays the usual windows welcome jingle, then hangs there for several seconds before loading the desktop.  As you pointed out Merete, since it is only several seconds it isn't that biog of a deal.  I just fuss over things like that since it only began doing it recently.

points going to Merete for being so helpful.  thanks!