Yeah .. its True , you can set Videos and animations as your desktop background .Download and Install DreamScene Activator. It is a freeware software .DreamScene is a feature that allows users to set any video in WMV/MPG format as the desktop wallpaper. This feature was included in Windows Vista Ultimate Edition,Windows 7
Download and Run the DreamScene Activator as Administrator. In case you get an unhandled exception error, simply click on Continue.
Next, click Enable DreamScene.
The Explorer will now restart and DreamScene will be enabled.
After the explorer has restarted, the user will be able to use DreamScene.
This program supports .mpg & .wmv video formats.
right click on a video and Set as desktop background(Set as DreamScene). By right clicking on the desktop you can pause or play DreamScene!!