as per Microsoft; http://support.microsoft.com/kb/929200

After you install Windows Internet Explorer 7 on a computer that is running Windows XP with Service Pack 2, a "Restore My Active Desktop" button appears on the desktop
To resolve this problem, follow these steps:

1. Click Start, click Run, type regedit, and then click OK.
2. Locate and then click the following registry subkey:
HKEY_CURRENT_USER\Software\Microsoft\Internet Explorer\Desktop\SafeMode\Components
3. In the right pane, right-click DeskHtmlVersion, and then click Modify.
4. In the Value data box, type 0, and then click OK.
5. Exit Registry Editor.
6. Log off from Windows, and then log on. The Restore My Active Desktop button has been removed.

...which is right on the first page of this thread..
I actually deleted my post containing this tip, but threadmaker Odegani caught it and repeated it in his reply. It does work though.

Hi,
I have encountered the same problem.I could resolve it as follows.

open "run"
type "gpedit.msc"
goto "user configuration - administrative templates - desktop - active desktop "

click on active desktop, on the right panel double click " Enable active desktop "
in the settings menu click "Enabled"
click apply and OK.

Hope it should help.

Using the information provided here, I've created two files to further simplify the process of restoring the desktop to its original state (it has happened to me more than once!). There are two files, one called Run.cmd, and the other restore.reg. These are the contents:

Run.cmd (4 lines):
@echo off
regedit /s Restore.reg
attrib -h -r -s "C:\Documents and Settings\%username%\Datos de programa\Microsoft\Internet Explorer\Desktop.htt"
del "C:\Documents and Settings\%username%\Datos de programa\Microsoft\Internet Explorer\Desktop.htt"

Restore.reg:
Windows Registry Editor Version 5.00

[HKEY_CURRENT_USER\Software\Microsoft\Internet Explorer\Desktop\SafeMode\Components]
"DeskHtmlVersion"=dword:00000000
"DeskHtmlMinorVersion"=dword:00000005
"Settings"=dword:00000001
"GeneralFlags"=dword:00000004

Thanks a lot for all the info, hope this works well for you, just remember to have both files on the same folder.

NOTE: As you may have noticed I'm running a spanish version of Windows, please replace "Datos de programa" with your route.

dude thnx..it worked..

change registry key to 0 instead 272 look like solve my problem
but the problem appear again on the next boot, so i have to change DeskHtmlVersion key again again and again everytime my computer run.

So i created small program to set DeskHtmlVersion to Zero Decimal and you must make it run every time my computer start and make DeskHtmlVersion keep to Zero Value.

I upload this file to rapidshare so download it guys…
Download This File

just follow this step :

1. Download and extrak the arcive, you will see DeskHtmlVersionToZero.exe and you have to make it to run on every time computer start, so follow next step.

2. Copy DeskHtmlVersionToZero.exe to C:\WINDOWS\system32\

3. Type regedit on StartMenu > RUN

4. Goto HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Run

5. Create String Key, give it name DeskHtmlVersionToZero

6. Fill The Value with C:\WINDOWS\system32\DeskHtmlVersionToZero.exe

7. Restart Computer.

8. To Check it, type msconfig on StartMenu > RUN, goto startup tab, you will see DeskHtmlVersionToZero on your startup program.

9. And Check that Your DeskHtmlVersion Keep in Zero Value.

If u like it please give me comments

YOU GUY'S RULE! Thanks so so much the regedit hack worked! Made my life so much easier!

Thanks again!
T

Worked great. Quick and painless. This one goes in the ole' files.

Thanks

heres a quick easy way. ok on the desktop right click then click on properties. click on background then choose the one you want and its fixed. then go on google and pick one you want

wait... OMG your joking... i just joined like dave and i was gonna say what he said lol