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I would recommend to set them to 'pause all' like you have now. This is not the default option, because it was unexpected by so many people, but I would recommend that.
Setting it to 'stop' while playing is equivalent to turning it off completely, it will free all memory and resources save for a few MB of RAM, which would unlikely have any kind of impact on performance.
Since you are talking about fullscreen windowed games, I guess it cannot be V-SYNC, since that's not available? Otherwise I would have guessed you dip just under 60 and due to V-SYNC it goes down all the way to 30.
If neither helps, try looking for hooks. If you have some graphcis hook that intrudes both programs then anything could happen.
if it helps im running on 3 screens
it's not a performance issue since the FPS isn't fluctuating but is getting capped at 30 fps whenever i enable wallpaper engine
and which wallpapers you are using exactly.