Hi, I just figured out how to fix it myself by a complete accident!
1) have the image you want to be your background
2) rename said image to "img0" without the quotes
3) create a system restore point, this is encase all else fails and it's also required
4) go to C:\windows\web\wallpaper\windows\
5) drag, drop, and replace the the sunflower picture with your img0
6) now right click on img0 and click "set as desktop background"
7) your screen should be fully black now, that's alright. This happened with me and now I have a custom background. Go to "Control Panel\All Control Panel Items\Recovery" without quotes. Now recover from your system recovery point you made in step 3 and Voila! after the recovery is made your image is now set.