Alright, I'm just going to post the solution I have the other person, see if it works for you.
1) Go to Run and type regedit
2) First, back up everything. Go to File > Export. Name it, make sure the Export Range is set to all and then save to desktop.
3) Navigate to the following registry entry: HKEY_CURRENT_USER\Software\MicrosoftWindows\CurrentVersion\Policies
4) Look at the list of the folders... if there is an entry named active desktop and one named system, delete them. If Explorer is the only entry, then let us know as this solution will not work.
5) Close Regedit.
6) Try to change your desktop background.
7) If your background changes, but your desktop icons all have a color border around them (mostly around the text) then in the Desktop Tab in Display settings, click Customize Desktop.
Go to the Web tab
9) If Lock Desktop Items is checked, Uncheck it. click Apply/Ok and that should fix your problem.