Ok here's a follow up on my previous problem

I've just ran a registry cleaner (Registry Mechanic 7.0) and cleaned out
everything. Now all the links in the messenger client are working properly.
Somehow that problem was fixed but one still remains. I cant select a
display picture at all. I still get the "The file you selected is not a
valid image file. Please select another one." error. I know it's not my
custom jpg because none of the ones in the messenger gallery work either.
After some more google searching I've learned that I'm not alone here. Any
suggestions? Here are my specs again:

Windows XP Pro (SP2)- fresh install
Pentium 4 with HT 2.8ghz oc'd to 3.2ghz
Windows Live Messenger 8.5 beta ( I still got the same error with 8.1)
2 gigs of ram