You have XP yes? If so, don't bother with the properties box ... just go to where you have your pictures stored ....
Start>my pictures
Open folder that your picture is in
Select picture and then click Set as Desktop Background (top left hand)
I've attached some pictures of how I do it but even though yours might not look the same - perhaps, for example, you don't have picture folders, or perhaps you have everything in list view - the basics are the same once you find your picture.
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