I've recently manually updated to version 12 of DisplayFusion after putting it off for a while, and what I noticed is that it interferes pretty badly with Wallpaper Engine. I've disabled all wallpaper management from DisplayFusion a long time ago and double checked that they were still disabled, but it still seems to cause some kind of interference. It's being discussed actively in this Steam Discussion and I'm not the only one experiencing this issue.

The issue is that the wallpapers playlist flickers every 5 seconds a little aggressively, and always resets the wallpaper to the first in the list. Strangely enough, if the Wallpaper Engine app is not minimized, then this issue doesn't seem to happen.

The only real fix I've found so far is to downgrade back to version 11 for the time being.

I can second this.
The old workaround used to be disabling "Override Wallpaper Image" under Settings/General in Wallpaper Engine. But today I am getting desktop/application corruption and stuttering with both Display Fusion and Wallpaper Engine enabled. I did update GeForce Drivers to 595.97 yesterday so I'm not beyond blaming Nvidia at this point. Will roll back drivers and report back.

Update:
Changing Windows wallpaper to a static color fixed the issue (from the Steam link posted). Windows? Why? I don't even anymore...

I tried this and it fixed it for a few minutes but I think Wallpaper Engine resets this to a picture for the wallpaper playlist so the issue just kept coming back once the app is minimized back into the system tray.

No

This setting in Wallpaper Engine seems buggy. It can re-enable itself for who knows what reason. Go and turn the setting off and close Wallpaper Engine. Fix the Windows settings back to solid color and restart Wallpaper Engine. Double-check that Wallpaper Engine has not reenabled the setting and double-check that Windows settings remain at a solid color.

I had a heck of a time making this stick. When the setting is enabled, Wallpaper Engine is constantly running some program to reset the wallpaper and about 20% of the time that causes a black flash for the wallpaper. The goal is to stop Wallpaper Engine from ever starting that program again.