The problems with the wallpaper and cursor are reported to be caused by a bug in the optional preview update (KB5120998) released at the end of August.
Check if you have that update installed and if so, uninstalling the update should fix the problems.
Also, in the Windows updates section in the settings app, disable this setting to stop the optional preview update re-installing on your system - 'Get the latest updates as soon as they are released'.