I had this exact problem....due to FakeAlert Trojan. All files on c: were hidden, desktop image was removed, desktop Icons were removed, Start Menu items were gone...along with all the garbage alerts about hard disk problems.
I removed FakeAlert with MalwareBytes and SuperAntiSpyware, but at least in my case the system was still only half repaired, but at least the trojan was removed.
After some research, I had to run the "attrib *.* -h /s /d" command from c:\ to see all of the files again. I ran this from a "cmd" window (i.e. a DOS command line). But at that point the desktop was still blank and I had no right-click context menu on the Desktop. Also, since the START menu was blank, I had to lauch the "cmd" from the Task Manager, with "File - New Task (Run..)"
The Nirsoft tool mentioned above was neat, but didn't help with this.
I finally found a little script (for XP only) at http://www.kellys-korner-xp.com/xp_tweaks.htm
...which re-enabled the desktop icons and right-click context menu on the Desktop. The script is called "Enable/Disable Desktop Icons", and it worked like a charm. When it is run, the script will toggle-on / toggle-off (depending on current state) the icons. If it ys that they have been disabled when you first run it, just run it again, and it will enable them.
Once I had control of the Desktop again, I re-enabled my Desktop background...but this is in "Control Panel - Display - Properties" anyway.