Follow these steps to use a custom image for the login screen background on Windows 7.
Open regedit and expand to this path:
HKEY_LOCAL_Machine > SOFTWARE > Microsoft > Windows > CurrentVersion > Authentication > LogonUI > Background
Change the OEMBackground key to have a value data of 1 (0 is off, 1 is on). Hit OK and close the registry editor.
Make sure your image is named backgroundDefault.jpg and store it in:
Sometimes the info directory may not yet exist (and by extension, the background directory), so you have to create it.