I just got infected with this myself, and this is what I
did.
Uninstall Spy Sheriff
Run the latest free ad-aware in safe mode. I let it get
rid of everything it found.
Then I went into c:/program files/ and deleted the Spy
Sheriff Folder.
Next I deleted all my temporary internet files, and all
my windows temp files.
Reboot.
This got rid of spy sheriff, but I still could not change
my desktop.
I then got this file: http://www.greyknight17.com/spy/RepairDesktop.reg
and ran that.
Reboot again.
Everything seems to be working properly now.
Hope this helps.