broken Finder, Lion 10.7.3

I have the Combined update 10.7.3 to Lion, installed on 2/8/12.
Two problems:
1. Finder is broken. Either it doesn't open at all, or I get the "Restore windows" or "Don't restore windows" dialog. But neither button in the dialog works, and Finder does not open.
I have removed Users/username/Library/Saved Application State/com.apple.finder.savedState, which gets rid of the Restore/Don'tRestore dialog, but Finder still doesn't work.

2. Desktop icons are constantly flashing.

Both these issues started after I had used iPhoto for the first time. Is there any connection?

Is there a fix that doesn't involve reloading the entire OS?
Thanks for any help!

Before reinstalling let's run a test: Create another account for testing purposes and give it admin privileges. Log on to the test account. Is the Finder normal or is the same thing happening?

Finder is OK with a different account. And no flashing icons with the other account. So it's specific to just the original account.

That tells us the original account is corrupt. What you can do is copy everything from your user folder to the new account. Once you verify that all your apps, settings, and documents are OK in the new account, you can remove the old one.