Right now the code is so if the default theme is used then it gets translated out to "Skin Default" which means that it shows different things in different languages.
Skinners tend to use this info label as a way to make certain things show in a skin rather than displaying it as a info label so when it gets translated it breaks skins for all non English
Discussion can be found here http://forum.xbmc.org/showthread.php?tid=131363
Changed: don't localize the info labels Skin.CurrentTheme and Skin.Cu…
Fixed: [Confluence] default background didn't show with last change (…
…note SKINDEFAULT will be case sensitive on non windows systems)
Not entierly relevant to this commit - but do you have the original background in a non lossy format? I'm investigating using compressed textures but need to have better material to start with.