Have you tried "Prefs/WorkBench",
Images in : Other memory.
I had the same problem, and this solved it.
Otherwise, you have to change your FBlit settings.
And trie this:
Download "WBCtrl" from Aminet and put this
in the C: directory.
Then put this command right after the FBlit command
in Startup-Sequence:
WBCtrl IMT=ICONFAST.
That should do the trick...
:-D