Ok, let's try this:
Right click on an empty spot on your desktop > properties
on first page "Themes" choose a different theme click apply, Now choose the theme you prefer click apply.
Basically, change it then change it back.
If you lost the XP style windows and buttons.
Right click on an empty spot on your desktop > properties > Appearance
under "Windows and buttons" change it then change it back to Windows XP style (clicking apply each time)
Same method basically, change it then change it back.
Let me know if you can now change yout wallpaper
Then you seem to have this TopthemesXP installed.
It might have something to do with this problem. Have you uninstalled it ?
Have you tried to change the theme/background via it ?