Desktop icons and icon labels may not display background transparency or the drop shadow effect in Windows Server 2003 and Windows XP

When you try to display icons and icon labels that have a transparent background or a drop-shadow effect, the backgrounds of the icon and of the desktop text is the same as the background color that is set in the Advanced Appearance dialog box in Display Properties.

This problem may occur if you use desktop content that turns on the Active Desktop feature. For example, this problem may occur if you have a background item or desktop item that uses a transparent image or an animated GIF image, or if you set a Web page as the active desktop. This problem may also occur if you turn on the Lock Web Items on Desktop feature.

1.	On the desktop, right-click My Computer, and then click Properties.
2.	In the System Properties dialog box, click the Advanced tab.
3.	On the Advanced tab, click Settings under Performance.
4.	Click to clear the Use drop shadows for icon labels on the desktop check box, click Apply, and then click OK two times.
5.	Close Control Panel.

To work around this issue, do not use desktop content that turns on the Active Desktop feature.

Microsoft has confirmed that this is a problem in the Microsoft products that are listed in the "Applies to" section.