I've looked everywhere and found a bazillion different fixes for this and none of them work.

At work they have just set a new desktop background with the company logo in the centre and a blue background.

The blue colour is not the same as the desktop background colour I selected and so there is a border around the background image (as it is centred) and the icon text for each icon has a blue square in the desktop background colour.

My colleague's desktop is fine as her icons don't have this square highlight.

Stuff I have tried so far...

Unlock web items from desktop.
Disable active desktop.
Turn on "use drop shadows" in System Settings.
Turn on clear fonts font smoothing.

None of these had any effect and in fact were already set to what I was told to set them to.

I'm sure there were a couple of others also.

Any other ideas as to what I can try to get this working?

TVM

BTW, I kind of bypassed this by opening GIMP and doing a dropper sample of the desktop image and setting the desktop colour to the same colour.

That worked but I'd be interested to find a fix.

When I had a similar issue, it was resolved by clearing the "Show shadows under menus" checkbox (Display properties -> Appearance -> Effects).

It is worth checking the web items are not locked on the desktop (Right-click on Desktop - "Arrange Icons by" and ensure Lock Web items is cleared).

You have already done the other two things I would suggest.

This was in Windows XP.

Hope this helps

If you have any web content on your desktop it wont work. I have an active desktop applied by group policy so like you I cannot have transparent icon text.

Thanks for the tips.

Unfortunately neither of these work.

I would put it down to group policy if one of my colleague's PCs hadn't got the transparent background.

Hmm...

Have you tried using TweakUI to rebuild the icons?