Most of my wallpapers are in PNG and when I go to apply them I always noticed they seemed to artifact. I searched this and it appears Windows converts anything that isn't JPG to JPG..which results in quality loss.
I have looked everywhere and cannot seem to find a way to fix this. So, does anyone here have any way to combat this? It is extremely annoying.
It was a while since I looked at it but at least for Windows 7 and earlier I don't think there was ever an easy solution. I make a high quality(low compression rate) JPG image of the pictures I'm about to use for wallpapers, and those remain untouched. It's best to adjust the resolution to the exact pixel count of the screen while you're at it, to avoid resizing artifacts. If necessary. :-)
I've noticed that with Windows 8 the opposite happens with wallpapers. Any JPG (or BMP) wallpapers you apply are automatically recoded with low quality artifacts, while PNG wallpapers are left as they were.
So for Windows 7, use JPG for your wallpapers. But for Windows 8, go with PNG. To avoid Windows introducing artifacts into them.
Anybody wanna bet on how Windows 9 will do it? ;-P