Hey, what is the theme you tried to install?
I recently tried a new theme, and it was doing the exact same bugs.
The theme was "tenebrae".
I use LS for 2 years now, on my WinXP laptop, and all is ok with my configuration (I even recently re-install everything with Omar's installer).

I guess the startup screen from Tenebrae doesn't run well on XP... THe only way to fix it is to :

1. call the Task Manager (ctrl+Shift+Escape)
2. Kill the process "Litestep" if it is running
3. Go to "File/New Task" and launch C:\Litestep\Litestep.Exe"
4. If it doesn't work (your programs load but no litestep on your desktop), go to "File/New Task" and launch C:\Litestep\lscp.exe
5. In the lscp window, choose "Theme Switcher" and double-click on the Simplicity entry.

You should have now your original Litestep theme :)

Hope it helps !

Greguti
Paris, France