I just upgraded to Monterey and have a couple of issues. The first is that I cannot get the display background to cycle through backgrounds in a user folder. Below are the steps I used:
Copied all of the files from
/System/Library/Desktop Pictures
to~/Library/Desktop Pictures
.Deleted the desktop pictures I didn't like.
Go to System Preferences > Desktop & Screen Saver
Select the folder Desktop Pictures with the Change Picture checked and set to 5 seconds and Random Order checked.
The preview in the top left of the dialog shows the correct background, but when I go back "<" to System Preferences or close out the dialog, the display background doesn't change from the default nor does it cycle through the default backgrounds at the requested 5 second interval.
If I click on one of the pictures inside the folder Desktop Pictures, the background changes but it unchecks and disable Change Picture.