This is a network of about 100 PC's. On most of the PC's the JPG loads correctly from a network share but daily on a few seemingly random machines across different OSes the wallpaper will only load say the top 300 pixels and then stop.
We considered loading the wallpaper locally but the machines are a mismatch of 7, Vista, XP. If we have to do it locally what is the proper place to copy this wallpaper to. Better still, is there something we can set in the GPO that applies this to make it load fully?
Sounds like you have a bad network problem there. You should never end up with partial files (replace "wallpaper" with "shared database file" and imagine the horror)... What's the file server?
The fact that the policy is applying consistently means this isn't a group policy problem per se; copying the file locally (only when it changes) and then setting it as the background, perhaps using a logon script, might be a better solution.
"Better still, is there something we can set in the GPO that applies this to make it load fully?" - didn't you set the "always load the full wallpaper" option? :)
(I kid, I kid... this should simply not happen).