Follow the instruction :
1. Change your "folder setting" to "show all hidden files and folders".

2. Go to inside the folder that u want to change the folder background image. Right-click, "customize this folder", "change icon", select any of these icon, OK, OK.
(This part is just to make windows make "desktop.ini" files. For some unknown reason, the system wouldn't apply our customization of "desktop.ini" if we made the files manually.)

3. Now, the "desktop.ini" files should appear, edit it with notepad.

4. Now add the following codes before/after the text inside "desktop.ini".

[{BE098140-A513-11D0-A3A4-00C04FD706EC}]iconarea_image=C:\WINDOWS\Web\Wallpaper\crystal.jpg

5. SAVE

6. Refresh(F5). If nothing change, try to Reopen the folder.

The codes that I give should show you "crystal.jpg"(default winxp desktop background pics.
Now, to make more reflect to what you want. I mean the picture that you like.
You can edit the path at the last line into your path of your picture. Paste the path, right after "iconarea_image=".

If it's removeable media, u can make the path relative not absolute, so it's more flexible.
If the pic are in the same folder with "desktop.ini", the path can be "\(pic filename)" without quote.

Final one, to restore the folder icon into the default icon, delete the following codes inside the "desktop.ini":
[.ShellClassInfo]IconFile=%SystemRoot%\system32\shell32.dllIconInde x=(some number)