Thanks Uranium, good call! I got this message...

Direct3D test results: Failure at step 8 (Creating 3D Device): HRESULT = 0x8007000e (Out of memory)

...which would seem to go along with the GTA3 needing more memory problem, right? But I still have no idea what the problem might be, or why it affects my icon display either.

Oh, also, when I try o run another game (Sports Car GT) the setup screen at the startup won't allow me to use direct3D... the only option not greyed out under 'select video driver' is 'software'. I'm pretty sure I used to have direct 3D as my default there. (the game won't work either)