When you right click on the Windows 7 desktop and select Personalize, you are presented with window. Now when you click on Desktop Background, in the drop down menu of the Picture locations, you will see a list of the locations from where you may have picked up the wallpapers to display them. 

The default locations like Windows Desktop Backgrounds, Solid Colors, etc will also be displayed. To remove the list of non-default locations, here is what you can do:

Open regedit and navigate to the following key:

HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Explorer\Wallpapers\Images

Now in the RHS, you will, other than “Default”, see some vaues from 0-9. These represent the directory path where images are stored.

To clear an entry from the Wallpaper Location drop down list, right click on the registry value & click Delete.

If you have liked this post, you might want to check out some more, on topics like Hacks, Registry, Tips.