BgInfo : Cannot create a file when the file already exists

Occasionally, on one machine only, we run into an error that reads something like this:

An error occurred while attempting to set the new desktop settings. Please ensure the current user has rights to change desktop settings. Cannot create a file when the file already exists.

• The machine in question is in the proper OU and is getting the right GPO's as confirmed by rsop/gpresult. (verbose)
• The user logging onto said machine is also in the proper OU and rsop/gpresult confirmed the correct GPO's being applied. (verbose)
• The application is being executed with administrative privileges.
  • The user logging on is a local administrator and is being executed under their context.
  • The command line being executed is: c:\path\to\bginfo.exe c:\path\to\our.bgi /timer:0
  • The user also has full rights to the our.bgi file and the parent directories all the way up to the root.
• There are no GPO's in place that prevent the execution of bginfo.exe.
• There are no GPO's in place that prevent changing the wallpaper.
• The security on the background file in question (bginfo.bmp file in c:\windows) appears to be ok.
  • Still, we changed ownership and explicitly gave that user full rights to the file.