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This issue can be caused by one or more of the following issues:

• There are third-party applications like Display Manager from Samsung. (resolution, uninstall)
• Background setting in the power options is disabled
• The Remove background images option is incorrectly checked (Control Panel\Ease of Access\Ease of Access Center\Make the computer easier to see)
• Domain policy disables the background changing
• Corrupted TranscodedWallpaper.jpg
• You are using Windows 7 Starter or Windows 7 Home Basic; these versions of Windows 7 do not support changing the desktop background picture.

To resolve your issue, follow the steps in the methods below starting with Method 1:

Method 1: Incompatible applications

Some applications that help manage display settings can cause compatibility issues with setting background pictures, displaying Aero glass and other Windows functionality. As a test, disable or uninstall any display management applications that are installed on your computer.

Method 2: Check background setting in the Power options

An option is available in the Power Options settings that will pause the background slideshow, follow the steps below to check your background settings in power options:
1. Click Start and type Power Options in the Search box and then click Power Options from the list
2. In the Select a power plan window, click Change plan settings next to your currently selected Power plan
3. Click Change advanced power settings and then click to expand the Desktop background settings option
4. Click to expand Slide show and make sure that the Plugged in: option is set to Available
5. Click OK and then close the Edit plan window

Method 3: Check the Remove background setting under the Ease of Access settings

An option is available in the Ease of Access settings that will remove background images, follow the steps below to check your background settings in power options:
1. Click Start, Control panel, Ease of Access and then click Ease of Access Center
2. Under Explore all settings click Make the computer easier to see
3. Make sure that the option to Remove background images is unchecked
4. Click OK 2 times and then close the Ease of Access Center window

Method 4: Check for a Domain policy that disables the background changing

If you are joined to a domain, your domain administrator may have disabled the changing of the desktop background, follow the steps below to check the desktop background policy:
1. Click Start and type group policy in the Search box and then click Edit Group Policy from the list
2. Click to expand the following policy tree structure: User Configuration, Administrative Templates, Desktop, Desktop, and double-click Desktop WallpaperSelect Note: If the Policy is enabled and set to a specific image, users cannot change the background. If the option is enabled and the image is not available, no background image is displayed.
3. Select Not Configured to enable the changing of the desktop background
Method 5: Corrupted TranscodedWallpaper.jpgIf the TranscodedWallpaper.jpg file has become corrupted you may be unable to change the desktop background picture, deleting this file can correct this issue and let you to change the background picture, follow the steps below to delete the TranscodedWallpaper.jpg file:
1. Copy the following text, and then click Start and past the text into the search box and click the Enter key on the keyboard:

%USERPROFILE%\AppData\Roaming\Microsoft\Windows\Themes\
2. Right-click the file that is named TranscodedWallpaper.jpg and then click Rename
3. Rename the file to TranscodedWallpaper.old, (change .jpg to .old) and then click Yes when prompted
4. Double-click slideshow.ini. Slideshow.ini should open with Notepad. Select all the text in slideshow.ini if any exists and press Delete on the keyboard, and then click File and Save to save the changes.
5. Close Notepad and close the Windows Explorer window and browse to the picture that will be set as the background image
6. Try to apply a background picture again

Method 6: Upgrade to a version of Windows 7 that supports changing background pictures: Windows 7 Starter and Windows 7 Home Basic do not support changing the desktop background picture. You can purchase Windows 7 at retail locations, or online in some countries or regions.

Here’s to Good Karma