A new update has been released that fixes a number of issues:
Sequential wallpaper cycling now works without causing Error 2 to be displayed. Fixed rare loading issues when cycling wallpapers Fixed prevent duplicates option that was previously not recording the used wallpapers correctly.
A number of users have difficulty after updating their installation, this is nearly always caused by some of the files being open, or AutoWallpaper is running when the installer is used. I have altered the installer to request a restart if any of it’s files were open during installation. This should correct any installer based issues for this version and future releases.