Cool thing. But I have problems with my wallpaper, too.
http://www.raven-id.de/other_stuff/Image1.jpg
The line between the white and yellow area should be completely black.
Hope I could help.
edit: I use WinXP with all the most recent updates. My wallpaper
is a jpg-file that I selected via the properties window you get
by right-clicking on the desktop.
