My phone screen has started flashing or screensaver picture breaking up and sometimes when the phone is opened, the screen is blank although the phone is still working (sound from the keys).

I guess you could make pictures with your Sony Ericsson phone, but I guess you better place this question between phones. Because there are people with more phone skills then here

remove the batterry of your phone or you may reformat your phone to fix the problem

Sure...
On any blank area of your desktop:
1. Right-click and select "Properties" inthe drop-down menu that appears.
2. Click on the [Desktop] tab (not the [Screen saver] tab)...
3. Click on the [Browse] button and find the picture you want to use
4. Click on the picture and see the preview.
5. Click [OK]
* done *

Well this phone does not support screen saver feature.

you may however install additional software.

http://www.google.co.in/search?hl=en&source=hp&q=screensaver+for+n72&meta=&aq=f&oq=

Hope, this helps

go to galleries ,select graphics & then screen saver .from here u will get screen saver provided by & if u want ur file as screen saver ,go to that picture open it , open options->use image->set as screen saver

It's not too hard, if you know flash, so just make your flash vision in Adobe Flash and then  export it in SWF format. nowaday, you know that many phones could read swf files (Flash files) and if your cell phone could read swf file, so you can set it as screensaver, I provided some useful links, I hope they could help you.
There's some useful softwares that help you to make flash screensaver, check these links:
http://www.zbsoft.net/flashscreensaver/

http://wareseeker.com/download/flash-screensaver-maker-3.368.rar/1f8bc48be

http://www.junglemetal.com/

http://flash-screensaver-creator.junglemetal-software.downloadsoftware4free.com/

http://www.flashjester.com/?section=tricks_creator

http://www.sofotex.com/Flash-Screensaver-Creator-download_L8520.html

And finally check this software: http://download.cnet.com/3001-2409_4-10406608.html?spi=a73e986a7038994b1086f35006420cc1

Sounds like your screensaver is using a picture of your desktop in it's code intentionally.

Right click on a blank area of your desktop --> select properties

--> click screensaver --> change it to "none" or another screensaver

Black screen is probably a screen saver or the screen is turned off by power management software.
Check your screensaver setting. Change the screensaver to None to disable screensaver.
I assume you are using Windows XP.
If the LCD is turned off by power management, on the same screen with screen saver, on the lower part of the box there is a Power button. Click to open Power Options Properties. Set your monitor power properties there.
When the screen go blank and you have to push power button, probably the computer is set to go to stand by mode after some idle minutes. You can also set it here in system standby setting.
Regards, 
Dapid Candra

there must be some problem with the hardware of screen. get it checked from a professional

you need to take the phone and have it fully service....do not power on wet phone it could short the main-board out