I have found a solution, please follow the solution below, but before removing anything recursively that is rm -r make sure to copy those folder contents if you have any personal data like desktop files, icons, symlinks, etc.

Use the — apt update && apt full-upgrade -y .

• It will install some additional packages.

Use — rm -r .config .cache .local

• Reboot a couple of times, sometimes it might not boot up and end up in initramfs, just type help, and force shutdown
• On next reboot, it should boot properly.

Some taskbar icons will be gone, but the system seems stable and reboot sustains the user settings like wallpaper, desktop files etc.

Users should always be using full-upgrade and not just upgrade on kali systems; we have this documented at https://www.kali.org/docs/general-use/updating-kali/ - because dependencies can and do change often, we expect users to run full upgrades, and not just upgrade.

Problem: No one is reading documentation :-/

Even though I did a full-upgrade, there is a bug like this in the background of the terminal, which comes automatically with the installation. And sometimes icon disappearances, other technical errors etc.

This report has been filed against an old version of Kali. We will be closing this ticket due to inactivity.

Please could you see if you are able to replicate this issue with the latest version of Kali Linux (https://www.kali.org/get-kali/)?

If you are still facing the same problem, feel free to re-open the ticket. If you choose to do this, could you provide more information to the issue you are facing, and also give information about your setup?
For more information, please read: https://www.kali.org/docs/community/submitting-issues-kali-bug-tracker/