First, uninstall picasa2 and picasa. See if that fixes it. If not, leave them uninstalled, and for each graphic format that is giving you grief, right click on one of them and hit properties. There should be an "Opens With" entry, hit the "Change" button there, and pick MSPaint (for now) and see if that fixes it.

Edit: The above was being typed while Doug was posting the dilbert cartoon...