Hi Johnny,
I tried to reproduce the issue on Windows 8.1 with latest update installed, the desktop icons are working fine. Did you check if you can reproduce the issue on another Windows 8.1 computer?
This issue could also occur if shell32.dll is corrupted. Let's re-register it and check if it resolves the issue.
- Press Windows key + X
- Click on Command prompt(Admin)
- Type regsvr32 shell32.dll and press enter.
- Restart the computer and check.
Hope this helps.