No problems found with live cd.
I have now managed to get the wallpaper to stay and have recovered some icons. It is a very strange thing.
The show desktop icon is no where to be found and many of the widgets have disappeared. Not all of that is a big deal. A lot of that I can live without. However, I really would like to know what happened.
I am not sure the log off and log off missing sound is related to the other problem but it did occur at the same time.
So for now I am going to take a break and live with this. I spent a lot of this holiday working on it. I will get back to it when I can.
Thanks to all those that pitched in to help.