Here are the necessary steps to add wallpaper to a MDI parent form:

Create a new project
Set the form's FormStyle to fsMDIForm
Drop an image on the form and select a bitmap into it.
Find the { Private Declarations } comment in the form's
   definition and add these lines right after it:
    FClientInstance : TFarProc;
    FPrevClientProc : TFarProc;
    procedure ClientWndProc(var Message: TMessage);
Find the "implementation" line and the {$R *.DFM} line that follows it. After that line, enter this code:
procedure TMainForm.ClientWndProc(var Message: TMessage);
var
  Dc : hDC;
  Row : Integer;
  Col : Integer;
begin
  with Message do
    case Msg of
      WM_ERASEBKGND:
      begin
        Dc := TWMEraseBkGnd(Message).Dc;
        for Row := 0 to ClientHeight div Image .Picture.Height do
          for Col := 0 to ClientWidth div Image .Picture.Width do
            BitBlt(Dc,
               Col * Image .Picture.Width,
               Row * Image .Picture.Height,
               Image .Picture.Width,
               Image .Picture.Height,
               Image .Picture.Bitmap.Canvas.Handle,
               0,
               0,
               SRCCOPY);
          Result :=  ;
      end;
      else
        Result := CallWindowProc(FPrevClientProc,
                                 ClientHandle,
                                 Msg,
                                 wParam,
                                 lParam);
  end;
end;
In the OnCreate method for the form, type the following lines of code:
   FClientInstance := MakeObjectInstance(ClientWndProc);
   FPrevClientProc := Pointer(GetWindowLong(ClientHandle, GWL_WNDPROC));
   SetWindowLong(ClientHandle, GWL_WNDPROC, LongInt(FClientInstance));
Add a new form to your project and set its FormStyle property to fsMDIChild.
Now you have a working MDI project with "wallpaper" where the image bitmap is tiled to cover the MDI form's client area.