Group Policy - display settings

By saying that you are "trying to apply a certain wallpaper", by what means are you trying to apply it?  Are you trying to use Group Policy or are you trying to set it on each workstation?

Another option you have is BGInfo (http://www.microsoft.com/technet/sysinternals/Miscellaneous/BgInfo.mspx) in a logon or startup script. You can create a centralized bginfo file that all clients can access and have the logon script apply the wallpaper.

I am trying to deploy through group policy display settings active desktop.........

1. Ensure that Active Desktop is enabled

  -- Look in Group Policy under "User Configuration | Administrative Templates | Desktop | Active Desktop"
    -- Open "Enable Active Desktop" and set it to "Enabled"
    -- Open "Disable Active Desktop" and set it to "Not Configured"


2. Ensure that an Active Desktop Wallpaper is enabled and assigned.

  -- Look in Group Policy under "User Configuration | Administrative Templates | Desktop | Active Desktop"
    -- Open "Active Desktop Wallpaper" and click "Enabled".
    -- Enter the full UNC or local path to the file, including the file name with extension


3. Ensure that the users can get to the location where the wallpaper is stored.

4. Ensure that there are no other Group Policies assigned to these users that will override the above policy changes.

Thanks, have done all that, I can only think it must be the mandatory profile that either overwrites or stops this happening.  Do you know if that can happen, not sure what is stored in the mandatory profile.

Thanks for that I did assume that was the problem but didn't know for sure.

The bginfo solution applies the new desktop after the manditory profile is applied, so it would still solve your problem.