Same issue here. If I hammer the mouse button on the image I want to use
in Appearance, then eventually it will select it, but that's not ideal
obviously. I have noticed though, then when I use Gnome Appearance, the
CPU usage shoots through the roof. I have the System Monitor applet on
my panel, and it shows 100% usage when using Gnome Appearance.

The workarounds work (terminal or cursor buttons to change wallpaper
rather than mouse clicks), but there's clearly an issue with Gnome
Appearance.

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can't change desktop backgrounds
https://bugs.launchpad.net/bugs/236521
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