  Nothing was "hijacked". It appears that you had a corrupted TranscodedWallpaper.jpg on your Windows 7 Home Premium 64-bit.The tech used Method 2 HERE to help you. I'm glad to that he was able to resolve your issue.
I recently purchased a Dell Inspiron 620 with Windows 7 Home Premium 64 bit. When trying to personalize my display, I click on a theme or background and the desktop background does not change.  The window color, sounds and screensaver all change to whatever theme I choose, just not the background. How do I get rid of this blue default background and personalize my computer? Pam
Can't change desktop background