Desktop Ogres
Corrut desktop files are another common source of problems. If your icons all suddenly turn generic or if you keep getting "Application not found" messages for files when you know you have the application, your desktop files have probably gone out to lunch.
To fix this problem, hold down the Option and Command keys while restarting. Don't release them until a dialog box appears asking if you want to rebuild the desktop file. Click OK and go get a coffee. The more files you have on the disk, the longer it will take to rebuild.
It is a good idea to rebuild the desktop after installing new applications, particularly if you have installed more than one in a short period.
There was a aggravating related bug in Macintosh Easy Open on System 7.5.0, where everytime the Mac started up, it would rebuild the desktop. To solve it, you had to delete the MEO prefs, restart with all extensions off EXCEPT MEO, let it rebuild the desktop, turn on all of the rest of the extensions and restart again. This has been fixed in 7.5.1 and later.
If you use Now Utilities, you should occasionally rebuild the Now QuickFiler databases. These are files that QuickFiler uses to keep track of disk space for compressed and uncompressed versions of files. If they get too far out of touch, bad things happen. To rebuilt them, hold down Option and Command while opening the QuickFiler Settings from the QuickFiler menu.