Sorry, I missed this first time round. Stumbled on it finding another thread. Anyway, you can have flash .swf files as wallpaper.
XP, and 98/Me can run HTML files as your backdrop (98/Me did this in "Active Desktop" mode, which isn't wonderfully stable. In XP, its built in.
Create a directory and store all your .swf in. Then create a textfile and call it "clock.html" Copy and paste in the following code:
--- Code start ---
<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd">
<html xmlns="http://www.w3.org/1999/xhtml" xml:lang="en" lang="en">
<head>
<meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1" />
<title>Doesn't matter what goes here</title>
</head>
<body bgcolor="#ffffff">
<!--url's used in the movie-->
<!--text used in the movie-->
<object classid="clsid:d27cdb6e-ae6d-11cf-96b8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=7,0,0,0" width="
700" height="
700" id="clock" align="middle">
<param name="allowScriptAccess" value="sameDomain" />
<param name="movie" value="
clockblock.swf" />
<param name="quality" value="high" />
<param name="bgcolor" value="#ffffff" />
<embed src="
clockblock.swf" quality="high" bgcolor="#ffffff" width="
700" height="
700" name="clock" align="middle" allowScriptAccess="sameDomain" type="application/x-shockwave-flash" pluginspage="http://www.macromedia.com/go/getflashplayer" />
</object>
</body>
</html>
--- Code end ---
I didn't use code tags, so I could highlight words. This file is set up to run clockblock.swf. If you want to run another .swf just alter the code in blue (change the name and sizes for each .swf file). If you want to run two clocks, you can copy and paste everything between <object> and </object>, altering the blue text.
Once you've done that, right click on the desktop, goto properties, and wallpaper, as you would to change the picture. Instead of choosing a picture, point the open dialog box at the HTML file in the directory you have just created.
I haven't actually tried it in 98/Me, but it should work. I have tried it in XP. If you want to be clever, you can learn bits of HTML to alter the space around the clock, like the background colour and add extra images and buttons.