Many thanks for your assistance, I have finally found the problem.
FYI
The virus created an association in Folder Options/File Types for the *.LNK file used by shortcuts
My method of repair was simple:
I deleted the association ( this stopped the shortcut option from operatinmg at all )
I then rebboted using a XP CD and repaired the system through the install XP option
NOT the repair console )
This not only repaired the shortcut process but also repaired the corrupted shortcuts on the desktop.
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