Stumped me Kim, not heard of this before!!!
What happens when you right click on the enpty desktop and select PROPERTIES, then click DESKTOP ?
You should see something like this;
Can you do this on yours and tell us what it says, and better still, post a pic like I have?
Also, what happens if you right click on a picture and select SET AS DESTKTOP BACKROUND (or something like that) ?
Here, use this pic and try that, tell me what happens;
Lastly, download and run these;
Ad Aware Personal SE
SpyBot
Both are very good programmes for getting rid of spyware - something that Norton won't typically find... Run em both (one after another) and report back