disappearing icons and inability to drag folders

I have a iMac G4 1 Gb running OSX 10.2.8 and have been experiencing some strange things lately.
Many of my application icons and folders in my applications folder have begun to disapear only to show the folder or app title. Furthermore, I cannot drag my desktop folders or files. I often have to restart to unfreeze my desktop files.
Can anyone help with this problem?
Should I reinsall OSX?

Please help.

Here is my guess. Your environment maybe corrupted. Try creating another user id and see if the problem follows you. Also before create the ID, try running repair permissions first.

witeshark said:

In case you don't know: log totally off. Log on, go in Finder, Applications. Utilities, Disk Utility. After the message -getting disk information- select volume (below the hard drive name -upper left corner). Just highlight it. Now look to the lower two things are there near the middle, verify permissions, repair permissions. Click repair permissions

Click to expand...

What should I do if this procedure does not work? I'm having almost the same problem as the one above, similar specs on my machine. Any thoughts?