i installed this to see what you meant and was unable to get it to look for grep - it did look for stuff located below. maybe removing /home/pk/.fluxbox/bsetbg would do it... else i would say reinstall it...
bsetbg: /home/pbharris/.fluxbox/bsetbg not found, creating...
bsetbg: checking for display... /usr/X11R6/bin/display
bsetbg: checking for Esetroot... /usr/bin/Esetroot
bsetbg: checking for wmsetbg... not found.
bsetbg: checking for xv... not found.
bsetbg: checking for xsetbg... /usr/X11R6/bin/xsetbg
bsetbg: checking for qiv... not found.
bsetbg: checking for xsri... /usr/bin/xsri
bsetbg: default configuration was created in /home/pbharris/.fluxbox/bsetbg.
bsetbg 1.12: (C) 2000 by lordzork industries (http://lordzork.com/)
(none) image is set using default values
-full, -f image is set fullscreen
-tile, -t image is set tiled
-center, -c image is set centered
-app, -a <application> image is set using <application> with
<"application options"> quote-enclosed "options" and
-center, -c|-tile, -t|-full, -f default fallback option
-display <string> display to connect to (bsetroot only)
-mod <x> <y> sets bsetroot modula pattern
-foreground, -fg <color> modula foreground color
-background, -bg <color> modula background color
-gradient <texture> sets bsetroot gradient texture
-from <color> gradient start color
-to <color> gradient end color
-solid <color> sets bsetroot solid color
-version, -v outputs bsetbg's version number
-info, -i outputs configuration info
-help, -h this message
usage: <options...> <image>
[pbharris@bugs ~]bsetbg pics/wallpaper/blue_one.jpg