Even though the Windows 2000 Terminal Services computer has the Disable Wallpaper option selected, the wallpaper is displayed on your Terminal Services client desktop?
If the client has enabled the Active Desktop feature, the wallpaper is still displayed.
You can disable Active Desktop for all Terminal Services connections:
1. Log onto the Terminal Services computer with administrator credentials.
2. Start / Programs / Administrative Tools / Terminal Services Configuration.
3. In Server Settings, double-click Active Desktop.
4. Select the Disable Active Desktop check box and press OK.