There was a feature in few vista versions which allowed to use videos as desktop wallpaper
You can use the software called Dreamscene Seven.
With this you can use any .wmv or .mpeg format file as a desktop background.Its very easy to install and takes only few kbs of disc space. 🙂
After the program is downloaded, it is necessary to run the file with administrative privileges (right button click is the run as Administrator). Then you have to select the button Install DreamScene.
Now a new item “Set as Desktop Background” will appear in the Video File Context Menu, with the help of which it can be set as a desktop background.