As the heading suggests, adding folder background is one of the most searched and used Windows XP trick. Windows XP and its versions also allows you to change folder backgrounds, but only needs a bit of coding which is the main and hard point of the Tutorial. You will get the Result as shown below in the Image. You can insert any Image of your choice.
Navigate to the Folder which you want to add the Background. Right Click and Click on Properties add the change its icon to any of the icon from the icon set.

Then open Tools tab at the top of the Windows and Click on Folder Options. Change the settings as shown below in the Image.

After applying the settings, you will get a file named desktop.ini in the Folder, edit with your favorite Editor and the following code in below the file as show in the Image.
[ExtShellFolderViews]
{BE098140-A513-11D0-A3A4-00C04FD706EC}={BE098140-A513-11D0-A3A4-00C04FD706EC}
[{BE098140-A513-11D0-A3A4-00C04FD706EC}]
IconArea_Image=C:Image Location
Choose the Image you want to show as background of the Folder and make sure that you have replaced C: Image Location in the Code with the Image Directory. Save the file and close the editor. Refresh or Reopen the folder and you will get the Desired Background in the Folder.