I need my wallpaper to act differently when in preview mode (the screen with "Settings" and "Set .. "). How do i know when it's drawn there?
Within onCreateEngine() you can use the isPreview() method.
Note that onCreateEngine() is "normally" called twice: once to create an instance for preview, and then again when you actually set the wallpaper.
Details here: http://developer.android.com/reference/android/service/wallpaper/WallpaperService.Engine.html