I tried many ways to fix by pasting into other programs like wordpad, etc. But, using a screen capture program like SnagIt got a colour image of the screen. This left me puzzled.
Finally, I figured out that the system was running very very low on physical memory and also many Windows updates were installed but the machine was never re-started. So the trick was to re-start the machine and lo - it brought colour to the images!! How weird can computer problems be at times.