when i installed windows 10 in a VM and logged in with my microsoft account, i mysteriously had the same wallpaper as my host PC running windows 8 logged in with the same account. i think microsoft may be doing some kind of goofy wallpaper sync thing, so maybe they compress the images to save space. doesn't make sense to compress it on the local PC though?
edit:
yep, checked onedrive settings and apparently backgrounds are synced. weird. maybe disabling that will fix it. i imagine windows 10 should have the same setting somewhere.