Do you use the "standart" theme of Windows 7 ? It seems for some themes or skins, behaviour of quicksearch may be cause issue. Try to change the transparency/glass effect and tell me if you see the icon when you click the "S" letter.
Don't know if you'll answer, but I'm asking anyway. I'm learning to skin foobar step-by-step, and I'd really like to mod this skin. But I can't figure out where is coded the transparency and the blur effect. Could you help me out?