System not responding when trying to save the background image setting

This is probably a software problem. You could contact Apple. First though try quitting out all of the other running programs and setting the background. The if that doesn't work try restarting the computer then setting the background. Then check that the file will open at all (eg go to finder and open the file). Just to make sure the file isn't corrupted. Finally make sure your hdd has atleast 1 gb of space and then try setting the image. If non of these things work contact Apple. Good Luck!