On a dual monitor setup, the "Set as wallpaper" feature only sets the wallpaper for the first monitor. The drop down selection menu gives Monitor "1" for all options, neither giving a choice to select the second monitor. Xfdesktop on the other hand is capable of setting wallpapers for both monitors individually while I am using Nvidia Twinview.
The monitor-id was hard-coded to '0'. This is fixed in commit: 21d8017