Hello,
Thank you for posting your query on Microsoft Community.
As per description, you are unable to hide desktop.ini.
The desktop.ini file by default has the System, Hidden and Read-only attributes assigned. So they should not be showing on the Desktop.As mentioned you have already tried to hide the system file.
I would suggest you to try is one more time and also click on APPLY TO ALL FOLDERS tab.
Go to Windows Explorer; click on Desktop. Go to Tools/Folder Options. Click View, and check "Hide protected operating system files" - CLICK "APPLY TO ALL FOLDERS". Just click OK.
If issue still persists, I would suggest you run a virus scan and check if that helps.
Microsoft Safety Scanner.
I would suggest you to perform a full system scan using the Microsoft Safety Scanner to eliminate any issues related to virus/malware.
Microsoft Safety Scanner
http://www.microsoft.com/security/scanner/en-us/default.aspx
Note: Any data files that are infected may only be cleaned by deleting the file entirely, which means there is a potential for data loss.
The Microsoft Safety Scanner expires 10 days after being downloaded. To rerun a scan with the latest anti-malware definitions, download and run the Microsoft Safety Scanner again.
Hope this helps, if you need further assistance on Windows let us know we will be glad to help.