Found these 2 posts as to system icon blur.
"I actually was able to fix it (Icon Blur) by
going into System Properties (rt. click My Computer), Advanced, Performance, Settings.
It was set to "Adjust for best appearance"
(which is what I wanted) and I just clicked on "Adjust
for best performance" and applied and then just reset it
to "Adjust for best appearance" and everyting was back to
right."
Also:
Try the edit on line 4:
http://www.kellys-korner-xp.com/xp_tweaks.htm
Also perhaps under Control Panel - Display - Appearance - Effects - Show shadows under menus?