Comment 1 for bug 536712

Something changed the default property for the image setting (picture_filename) to the warty image. It should be like the generic value (in your case: '/usr/share/images/xsplash/bg_1680x1050.jpg').

Are you using (or have you used) any other login wallpaper choosers or XSplash configuration tools? - Or made any manual changes to gconf, specifically to the picture_filename property?

Please try issuing the following command and see if all does not start going as expected:

sudo -u gdm gconftool-2 -t string -s /desktop/gnome/background/picture_filename /usr/share/images/xsplash/bg_1680x1050.jpg