I hate to get into conspiracy theories, but I believe that earlier this year Windows 7 starter
was quietly tweaked to disable any attempts at modifying the wall paper using the suggested methods.
I have a DELL mini10 and have tried modifying it thru the registry and the Oceanis software, both failed. I'm sure there will be another work around soon enough, but It is chintzy on the part of MICROSOFT to delete such a basic feature. Frankly, I would be happy if I could make the background black, with say a little blinking cursor bottom left..................I'm such a Luddite
Anyway, I look forward to those much cleverer than I to find a work around.