Can No Longer Access Picture Files Or Thumbnails

When I booted my Vista Business laptop this morning the wallpaper had gone black. I used to use a pic from my Pictures folder as my background. Now I can no longer access picture files or thumbnails through the Desktop Background applet in Control Panel. When I try to browse to the Pictures folder it appears empty. When I mouse over the contents, I get blank transparent boxes with the picture names, instead of thumbnails. If I try to use a Windows background picture, the thumbnails there are pixellated generic icons. The only background I can set is Solid Colour. I can change colours but that's it. There's no error message when I try to change my wallpaper. My user account is an Administrator (both domain and local) and I don't use screen savers. I've already tried the following suggestions from this board (rebooted after each step):

- Checked Group Policy settings, made sure all items under User ConfigurationAdmin. templatesDesktopDesktop are set to "not configured"
- Checked Ease of Use settings, backgrounds are NOT disabled
- Downloaded and "merged" the "wallpaper enable" reg file from Winhelp
- Downloaded/ran KB Hotfix 934008
- Tried steps in Vista Tutorial on disabling/enabling desktop changes, including other links to reg hacks (none of which worked).