I think the older wxWidgets just grabbed the first image in the ICO so it was treated as a single image. The newer wxWidgets is saying there are 9 frames in the image so xLights is trying to decode it as an animation. Anyway, I've updated the code so if decoding as an animated gif fails, it will just use the first image so it should work with the next release of xLights.
Also, while debugging your file, I noticed all the Single Strands on the Ground Props were taking forever. Did some profiling on that and found a way to speed that up a bit as well. Thanks for the test case!
