It is very likely that when the PEPv1 XCF was migrated to PEPv2, the original Panel that was on the System Page was not set all the way to the back (behind all other items) and therefore was not converted to the 'System Background' on System Properties.

The fix is simple:

A. On the System Page, simply save the image from Panel (your intended background) to the hard drive.
B. On the System Page, delete the Panel from which you just save the image.
C. On the System Properties, click the 'Appearance' tab and add the background you saved in Step #A.

Now, if you Download or Simulate, any Activities with custom backgrounds should indeed show the background.