SSDream is free and now works with any version of Vista.
SSDream is an application I wrote that allows screen savers to be used as your wallpaper. In addition, it also supports video playback and images. Timed transitions are used to cycle through your collection of media. As a added bonus, if you have multiple monitors, SSDream will play something different on each monitor.
Install SSDream here (IE7 required) or check out the SSDream home page for more information and to see a video of SSDream running.
