xfdesktop 4.20 might be accidentally built w/o desktop icons?

Likely because

libyaml is a build dependency now for desktop icons. https://gitlab.xfce.org/xfce/xfdesktop/-/commit/ede71841bba3a3ad29d6d45587e3b4ec2dc094eb

To upload designs, you'll need to enable LFS and have an admin enable hashed storage. More information

Admin message