Changing the Folder Background in XP/Server 2003
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I remember doing this in Windows 98 or something like that was a lot easier, but here is the procedure to follow if you want to change the background picture or color of a folder in either Windows XP or Server 2003... I haven't tried it in Vista yet though.

The first thing you need to do is to designate the folder you want to edit the background on as a system file. To do this, go to the run prompt and type in-
attrib {folder name} +s
A black window should flash briefly. This will give your folder the desktop.ini file that you will need to edit to provide the picture/background.

After you have set the folder to a system type, you will need to overwrite the current desktop.ini file. To do this, go to c:\windows and make a copy of the desktop.ini file that you find there (you may need to enable the view hidden files and folders button). Copy this file over to the folder that you want to change the background of. A message will pop up, asking if you want to overwrite the current .ini file. Say yes.

You will then see the new desktop.ini file pop up in your folder space. Go ahead and open it with notepad and put the following lines of code into it-

[ExtShellFolderViews]
{BE098140-A513-11D0-A3A4-00C04FD706EC}={BE098140-A513-11D0-A3A4-00C04FD706EC}
[{BE098140-A513-11D0-A3A4-00C04FD706EC}]
IconArea_Image=C:\path\folder\background.jpg

The "IconArea_Image" path is the path to where your picture file that you would like to change the background to is located. (To change to a single color, I just open up a new file in paint, and then use the paintbucked tool to fill the document with a color of my choice, then save it like that). So just specify the path and save the file. After you have saved, close the folder and reopen it, and you will have your image as the background. Feel free to delete the desktop.ini file now, as the image should stay even after it is gone.