Very strange, it seems to be working fine for me. Make sure you have Windows Aero enabled, and have the "Use wallpaper transitions" setting enabled in the DisplayFusion Settings > Wallpaper window. If these are both enabled, can you post your Troubleshooting information? Thanks!
Works fine for me as well, feel free to email the info from the Troubleshooting tab in DisplayFusion to me at support@binaryfortress.com and I'll see if we can figure out what the issue is.
We've actually had a few other people report this issue over the weekend as well and I've been able to confirm it. It seems to be only when the wallpaper changes on the timer. When forced to change manually, the transition works fine. We'll hopefully have this fixed up for the next beta version.
