WMD-Backgrounds is not a real widget, but should be used to serve as a background for a widget or icon or a number of widgets/icons (e.g. to group icons).
It takes some experimenting to get everything laid out. Here are some tips:

* set the Grid Size to a smaller value, e.g. 4 for width and 4 for height (via Settings > Pages > Grid Size). This allows you to position your widget more accurately
* the order in which widgets are added is important to make sure the background widget is at the back of the actual widget. You can easily change this order by editing the /Androkkid/settings.ini file and copy the lines with the background widget(s) and paste them above the other widgets
* you can add the background widgets as much as you want and per widget change the size by editing it in Androkkid. There are 2 background widgets in the zip with a size of 96x96 (WMD-Background1) and 460x96 (WMD-Background2). It's easy to create your own backgrounds to replace the ones in the zip (a border, red, blue, gold, green, default, Phoca Thumb and Nexus One background)
* For each widget there are multiple background images. To change the background image, just copy it's name to background.png