Desktop icons are disappearing & not behaving I've just been attempting to shift some stuff across to an external hardrive to make space on the laptop HD and all was going well until I tried copying a large amount of photos into a folder on the desktop and then it all went bonkers.

One of the symptoms of this curious affliction is that if one is to attempt to create a new folder on the desktop, it works but is invisible. Another involves clicking the mouse on one icon, only to have opened the app/doc/program relevant to an icon either to the sides or above the clicked icon.
I had a similar problem where icons would stay when files were deleted on the Desktop.

I ran AppleJack to clear the caches and it went away. I'm not sure exactly what cache it cleared that fixed it but it worked.

I'm assuming you have tried a restart.