For those who are still looking for the right answer:
You need to declare the tag <meta-data>inside the declaration of the wallpaper browser ad inside the manifest file:
<service
android:name=".MyWallpaperService"
android:enabled="true"
android:label="My Wallpaper"
android:permission="android.permission.BIND_WALLPAPER" >
<intent-filter>
<action android:name="android.service.wallpaper.WallpaperService"/>
</intent-filter>
<meta-data
android:name="android.service.wallpaper"
android:resource="@xml/wallpaper" >
</meta-data>
</service>
This tag points to an xml file that contains information about the wallpaper icon that appears in the Live Wallpaper section:
<?xml version="1.0" encoding="UTF-8"?>
<wallpaper
xmlns:android="http://schemas.android.com/apk/res/android"
android:label="GIF Wallpaper"
android:thumbnail="@android:drawable/btn_star">
</wallpaper>
So, android:thumbnailthis is the place where you set the resource for the icon
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