Hi,
Previously posted by Malke MS-MVP
Four things are required for transparent icon backgrounds:
1) System Properties > Advanced > Performance Settings > VisualEffects -
check
"use drop shadows for icon labels".
2) Right-click on Desktop > Arrange Icons by > Lock Web items must be
cleared.
3) If you have any web content on your desktop, transparency won't work.
To check for web content: Display Properties > Desktop > Customize
Desktop>Web - make sure all checkboxes are clear.
4) Wallpaper must be an image file, not html.