Well I just finished a successful reformat of my drive (YEA!) and was messing around with several windows open and noticed I was having a color problem. It seems that when I have a window open the colors on the desktop image all resort back to very primitive colors (like 8 main colors rather than the 256 that I have the setting for.) Also, in a possibly related problem, if I have my MS Media player open and it has a image in it and I close it, a big pinkish-red box replaces the image and then the application closes down. What's going on here!
It sounds like you might have the wrong drivers installed for your video card.
What do you see when you go to "Start>Settings>Display>Settings tab>Advanced>Adapter"? Does it show your video card? If it doesn't then click on "Change" and reinstall your drivers (follow the on-screen instructions and have your driver disk/cd ready).
Even if it does show the right card, try reinstalling the drivers anyway.