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I don't think so, no. You can boot to the OS, insert the XP CD in the drive and run sfc /scannow. Let's see if that helps.By the way, what happened just before this problem appeared? I doubt it just popped up out of blue.
Use TweakUI to rebuild your icons.See if this does it.
Have you tried doing a system restore to before the problem started?Did you run the file checker like Allan suggested?