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I don't know if this will work since you have done complete installs but its worth a try. You may have a corrupt file in your cache folder. Deleting the cache files will correct the display issue.
Close the Messenger program if you currently have it running
Go to:
C:\Program Files\Yahoo!\Messenger\cache\Avatars
C:\Program Files\Yahoo!\Messenger\cache\Icon
Delete all of the files in the above folders
Sign in to Messenger and you should be all set.
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