I think, the black area that you see might be caused by either a corrupted installation of the .net framework 3.5sp1 or a problem with your graphics card not supporting transparency for some reason.
Try to uninstall all .net framework starting by the 3.5sp1 then 3.0 and finally the 2.0.
Then Download the full .net package here : .NET Framework 3.5 Service Pack 1 (Full Package)
Quite often, microsoft setups that need to download something, retrieves corrupted files for some reason.
Try also to download the latest driver for your graphics card, uninstall your old driver before reinstalling the new one.
If the problem persist after doing those steps, post again I'll try my best to help you.
Also you say that drag and drop doesn't work, but can you move the iconSeeker around or does the application completely freeze?
I just found a thread in another forum with someone who has this exact same problem but with a different application.
This bug seems to be related with the transparency in c# 3.5.
I'm looking into it and I'll post more if I can find how to solve this.