Problems with LL2.8 to LL3.2 update - HELP

[Daveyboy]

I have just updated LL2.8 to LL3.2, retaining the original /home directory but have encountered the following initial problems with this update.

• Menu, Install Updates - Opens a blank LXTerminal, no user name showing and unable to type ANYTHING in terminal
  
• Menu, System, Create System Report - Identical to No1 above
  
• Wallpapers cannot be set in ANY directory as ALL images greyed out in Background Settings Manager but freely available in image viewer
  

Any help in resolving these issues would be greatly appreciated