~/Desktop is the objects on your desktop (files / folders / etc.)
your settings are typically stored in ~/.gnome or ~/.gnome2 or ~/.gconf
try moving them... mv .gnome .gnome-bak one at a time and then log in again and see what works. Moving them rather than deleting them allows you to recover settings that you might want to keep
Craig
Thanks Craig for the idea. I'll try that out. I may try it at a file-level as well and see what happens. If not, I guess I'll just re-create the user because I'm stumped.
Michael