Photoshop cs3 image corruption issue....

hi

im using the latest ver of PS, and i am creating a website within photoshop which is being put together in dreamweaver (via tables).
my problem is related to PS itself. I seem to have a aqua blue square located in my image on a layer which i never put there. it sort of looks like an artifact error, like when watching a badly macro-blocked video. i don't know how to get rid of it.
i've tried selecting it and deleting it but it just deleted the background image also, creating a white space.
any ideas of what the problem is and how to fix it??

cheers
slider17

P.S link below is screengrab of the problem

Hi Slider,

This looks a bit like you have two overlapping layers with roughly the same colour and you have the top layer blending mode set to something like Overlay or maybe Soft Light.