Wallpaper / Background Restricted - Display Properties

Windows XP Background area located in the Display Properties under the Desktop tab is restricted/disabled.The most likely cause of this is malware utilizing Group Policy Objects which enforces policies for system settings and/or user account(s) settings. The Group Policy for Prevent changing wallpaper will cause the Background area to be restricted/disabled in Display Properties when enabled.
Group Policies are typically applied at businesses to control access to programs, system properties, and user account settings. For Home users, Background area can be restricted/disabled by these Group Policies but usually malware is the culprit. If you are a home user and the Background area is restricted/disabled from the Display Properties and looks like the pictures below then there is a good chance you are infected with malware

Manual Steps For Group Policy Editor
***The Group Policy Editor requires Administrative privileges and is only available for Windows XP Professional Edition. Windows XP Home users can use the Windows XP Registry method to remove the Group Policy restriction.***

1. Click Start and then Run.
2. Type gpedit.msc in the Run dialog box.
3. Press ENTER on your keyboard.
   In the Group Policy Editor navigate to:User Configuration > Administrative Templates > Control Panel > Display
4. Double-click Prevent changing wallpaper.
5. Select Not Configured.

***If the Background area is restricted/disabled (greyed out) on a per User account basis then the above method will not work, you will need to use the Registry Editor to remove the Group Policy.***
Manual Steps Using Windows XP Registry

1. Click Start and then Run.
2. Type regedit.exe in the Run dialog box.
3. Press ENTER on your keyboard.
   Navigate to:HKCU\Software\Microsoft\Windows\CurrentVersion\Policies\ActiveDesktop
   Right-click {450D8FBA-AD25-11D0-98A8-0800361B1103} to select Modify.
4. Change the value to 0.
   Navigate to:HKLM\Software\Microsoft\Windows\CurrentVersion\Policies\ActiveDesktop
   Right-click NoChangingWallPaper to select Modify.
5. Change the value to 0.
6. Quit the Registry Editor (Regedit.exe).

***You may need to log off then log on to your user account or restart your computer for the changes to take affect.***
Manual Steps For REG ADD

1. Open a Command Window.
2. Type:REG ADD "HKCU\Software\Microsoft\Windows\CurrentVersion\Policies\ActiveDesktop" /v NoChangingWallPaper /t REG_DWORD /d 0
3. Press ENTER on your keyboard.
   Type:REG ADD "HKLM\Software\Microsoft\Windows\CurrentVersion\Policies\ActiveDesktop" /v NoChangingWallPaper /t REG_DWORD /d 0
4. Press ENTER on your keyboard.
5. Type EXIT and press ENTER on your keyboard.
6. *** You may need to log off then log on to your user account or restart your computer for the changes to take affect.