Thanks Derrek.. have tried the two common approaches.. change the number of colors on the desktop and deleting the icon cache.. neither seem to resolve my problem.
I do think it is related to a corrupt "arrow" icon and I found a registry hack that will place a transparent icon instead of the regular one. Will have to wait a bit though.. currently doing a update of Vista... 48 updates.. Not one to do this often enough
And a tweakUI would be perfect... if there was one