icon's have deformed borders

IThe icons used to look great after I just installed XP, but then I changed some settings to improve performace, and now they look ugly, with deformed borders around them through which I can see my desktop's color. See picture below. When I change my setting's from 32 bit to 16 bit color they display normal. I tryed changing the default xp look, not classic and they still have the deformed color no matter what setting I chose unless I change to 16 bit color. Only high color 32 bit icons look like this, other 256 color or 16 bit color icons look fine. I have by default my destop to classic but even xp style they display deformed.
http://home.earthlink.net/~tonyram057/other/desktop.jpg

Those 32-bit icons were made with alpha-channeling. Helps them look nice and smooth at 32-bit. At 16-bit, all the icons will look the same. Now, why they changed on you I don't know. You didn't mention all the display changes you made or with what app/utility you made it with. But it sounds like something messed up XP's ability to view alpha-channeled graphics. Hopefully someone with a little more knowledge in this area wil come around soon. hang in there.

I use Microangelo 5 to manage and create my icons.

Excellent program...use it myself. If you are up to it, you could bring those questionable icons up and see if you can clean them up a bit. But first, try Tweak UI for XP (It's free). Scroll to the last entry (in the left panel) and select to Rebuild Icons. Might help.