Thanks for your report, that works fine in my desktop, not confirming.
Are you using Compiz (Desktop Effects tabs)? Is your system up to date?
Does it works with a new user?
** Changed in: nautilus (Ubuntu)
Importance: Undecided => Low
Status: New => Incomplete
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Changing desktop background doesn't work
https://bugs.launchpad.net/bugs/139320
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Desktop Bugs, which is a bug assignee.
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