As it can be seen in the picture I don't have the option to browse the folders.
I tried Wolf Launcher 0.1.15 from techdoctoruk and ATV Launcher Pro from the Play Store. Same issue with both.
I don't have this issue with ATV Launcher Free, but that version has several features locked...
Wallpaper selection is broken in ATV Launcher Pro. It works in the free version. You can still change it if you change the system wallpaper. Some people are using Image 2 Wallpaper or something like that.
Wolf Launcher is a ripped off and modded ATV Launcher Pro. They are working on modding in a fix for wallpaper.
Sideload Channel Launcher 2 (no free version) has working background selection and is actively supported. Sadly, there is no in app wallpaper preview, so you have to select it by filename. But this launcher is actively supported by the dev (only one like that, frankly).
Will be releasing an update for CCGTV tomorrow!