Full Report
Microsoft has confirmed that desktop settings are lost or reset on some Windows devices after installing the KB5120998 August 2026 preview update. [...]
Analysis Summary
# Morning News Roll-up September 3, 2026
## Overview
Microsoft has confirmed a significant bug in the August 2026 preview update (KB5120998) that causes Windows desktop settings to reset or fail to load. While primarily impacting aesthetics like wallpapers and themes, the bug also affects functional hardware configurations such as mouse settings.
## Top Stories
### Microsoft KB5120998 Update Resets Desktop and Mouse Settings
- Summary: The KB5120998 preview update is causing Windows 11 systems to lose custom desktop configurations, defaulting to black backgrounds and resetting mouse settings. Microsoft confirms that manual restoration of these settings is currently impossible on affected devices.
- Source: hxxps://www[.]bleepingcomputer[.]com/news/microsoft/microsoft-says-kb5120998-windows-update-resets-desktop-settings/
### Persistence of Credential-Based Attacks
- Summary: New research indicates that once attackers obtain valid credentials, defensive prevention rates drop significantly, with only 37% of malicious actions being blocked post-access.
- Source: hxxps://hubs[.]li/Q04sB3fb0
### Windows 11 Version 24H2 and 25H2 Stability Issues
- Summary: The latest non-security preview updates for Windows 11 have introduced regressions affecting the Start menu, Taskbar, and Search, alongside the high-profile desktop settings bug.
- Source: hxxps://www[.]bleepingcomputer[.]com/news/security/windows-11-kb5120998-update-released-with-35-changes-and-fixes/
***
# Main Topic
Technical instability and configuration loss in Windows 11 systems following the installation of the KB5120998 August 2026 preview update.
## Key Points
- **Settings Reset:** The update causes desktop backgrounds to revert to a solid black color.
- **Persistence of Issue:** Users are unable to manually restore custom settings (wallpapers, contrast themes, or slideshows) as the bug prevents the OS from loading these settings entirely.
- **Hardware Impact:** Mouse settings are also reset or changed, with no current ability to revert to previous configurations.
- **Update Type:** KB5120998 is an optional, non-security preview update, but it installs automatically for users who have the "Get the latest updates as soon as they’re available" toggle enabled.
## Threat Actors
- **N/A:** This is a software quality/stability issue identified in an official Microsoft update, not a malicious campaign by a threat actor.
## TTPs
- **Technique:** Software Regression / Buggy Update Distribution.
- **Mechanism:** The issue prevents the correct loading of user-profile settings from the registry or configuration files, defaulting to a fail-safe state (black background).
## Affected Systems
- **Operating Systems:**
- Windows 11 version 24H2
- Windows 11 version 25H2
- **Builds:** OS Builds 26200.9278 and related preview releases.
## Mitigations
- **Avoid Installation:** Users who have not yet installed KB5120998 should avoid clicking "Download and install."
- **Disable Automatic Updates:** Turn off the "Get the latest updates as soon as they're available" toggle in Windows Update settings to prevent automatic deployment of preview builds.
- **Uninstall Update:** If already affected, users may attempt to uninstall the KB5120998 update via *Settings > Windows Update > Update history > Uninstall updates*.
- **Official Fix:** Await a formal fix or a Known Issue Rollback (KIR) from Microsoft.
## Conclusion
The KB5120998 update represents a significant regression in Windows 11 stability, primarily affecting user environment customization. While not a security vulnerability in the traditional sense, the inability to maintain hardware (mouse) and accessibility (contrast themes) settings can impact productivity and usability. IT administrators should pause the deployment of optional preview updates until a resolution is provided.