Can someone figure out how to set this in registry. It's greyed out, I assume because my system is not activated.
that is exactly the point. When activated, your desktop-pic is visible on Startscreen as well. Before activation you only get the default paintings
When I installed win8.1 preview I set the desktop to solid color like I always did, after that I found installing the leaked builds upto build 9600, it always set automatically to solid color right after installation, even for the 9600 Ent which is not activated, naturally I used my MS a/c. Maybe you could try this trick.