Had same problem, no right click on desktop, no icons showing.
Ubuntu 9.10 Karmic
I erased ~/.compiz and ~/.gconf/app/compiz
Did not fixed.
I'm not sure if deleting those directories helped fix the problem.
But procedure after doing that, did.

gtweakui Nautilus: Deactivate an activate "Use nautilus to draw desktop"

Open Gnome Config Editor (gconf-editor)
app/gnome-session/options
Set : auto_save_session

Closed session, log in again and now desktop shows correctly, I deactivated the 
auto_save_session after
and still works, so I guess it can be set all the time or not after the session 
has been saved with the correct values.

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Nautilus not showing the desktop icons & wallpaper on login
https://bugs.launchpad.net/bugs/218070
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