Funny you say this firebird.
I currently have a corrupt windows photo gallery resulting in the photos being striped and in grey with half the screen black.
Ive been at this for 2 days on and off now...will post back if any luck.
Though i do not use WPG much at all..it would be nice to fix this.
Relating to Picassa...i have no problem which leads me to think you have more going on here.