Strange but true, setting whole picture as a wallpaper in Android is tricky. When setting wallpaper from Gallery, you have to pinch and zoom the marquee trying hard to get whole of the picture and if it is widescreen wallpaper than sadly you can't even do that.
This way of setting wallpaper is good only if you are glad setting a particular area of the picture else rubbish.
Well there is a trick to achieve this, this will only work if you are setting wallpaper from websites. What you need to do is go to your browser ( preferably Dolphin Browser ) search for wallpaper ( Microsoft desktop wallpaper for Windows 7 website is good ) then tap to view it in browser, wait to load the wallpaper and then touch the wallpaper for few seconds to get the menu, here you can select "set wallpaper" option. That all you are good to go.