That's not quite what I was referring to, Clive. This was some sort of practical joke which hid all the icons behind a false desktop.
Anyway, funnily enough, I got talking to a customer today, who just happened to say he had recently had the same problem. He was advised to reboot in safe mode, log in as the administrator, insert the xp CD, click on Start > Run > type 'sfc /scannow' > OK, and this fixed the problem.