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Using the system settings app to set a custom wallpaper (from my own images, not the ones that are pre-installed with elementary) makes the active wallpaper black instead of changing to the requested image.
Using a file browser, right clicking an image and hitting "Set as Desktop Background" works just fine.
Why is this, and how do I fix it?
This seems to be a bug. I've submitted the report.
Please, follow the link and tell that you are affected too!
I ran into the same issue. The workaround is to copy the image you wish to use into /usr/share/backgrounds and they will show up in the background options.
