As in topic. I noticed it in the latest version of DisplayFusion v12.0.1 that I just updated earlier today. It would bug out either when it's time to change the wallaper, or when you apply the slideshow settings and it fetches a new wallpaper. It is to be noted that this is an inconsistent behavior. Sometimes it works, sometimes it basically just couldn't seem to change the wallpaper, gave up, and it just changes to Windows wallpaper.

Don't know which one of the 'fixes' on the v12.0.1 broke it for me but reverting to v12.0.0 seems to have fixed it.

Doesn't seem to help.

When it failed to change the wallpaper and just revert to Windows's, I need to go change the Windows wallpaper to solid color, then reapply Displayfusion to manage the wallpaper. It doesn't last though. With and without setting "Disable Wallpaper Transition Code", it often just fails to make the next wallpaper change. Sometimes it would be able to make the change 1x - 2x, but it ALWAYS fails eventually. More often than not, it failed on the very next wallpaper change.

PS. This issue doesn't seem to be happening in all my PCs for some reason.
I have a Zenbook Duo laptop that have most of the same app setup as my desktop that's been having problem and the wallpaper there have no such issue.

Is there anything I should upload to give you a better understanding on this issue?

No, HDR on Windows is not enabled.

Took too long to follow up. I already reverted to v12.0.0.

Seems others are having simmilar issues with it. I hope you can get it resolved. I'll just await the next update until I try it again. For now, I'm not going to spend more time trying to resolve this one.