You might be able to recover the essential files by creating a new VM and copying the private.img and volatile.img files from the old VM (/var/log/qubes/appvms/<vm-name>) to the new one, then booting the new one. This worked for me when I had to reinstall QubesOs.
As to the error itself, it seems to suggest a missing icon file somewhere. I don't know why that would stop the VM from starting, but qrexec-daemon seems to be rather brittle. No idea how you would fix it. Might require either digging into the code or help from one of the developers to track down and resolve.
Ron