I have a similar problem in that the icons appear but I have to wait ages for them to highlight and sometimes I even have to re-boot my computer and even then it does not always work.Wonder if the problems are connected.
If you have SP2 the icon cache is around 4000 anyway so no changes should be needed. Another `worth a try` step that may or may not work; IF your PC is stand-alone and not networked, go to Control Panel/Folder Options, click View, make sure `auto search for network folders and printers` is unticked. Also go to your Local Network Connection, right click, select Properties, untick File and Printer Sharing and Client for Microsoft Networks if either are installed and ticked. Reboot.
This thread is now locked and can not be replied to.