It’s really easy to install your header image.
Go to the LAYOUT window and click on “EDIT” in the header widget (little blue link). The following pop-up will open:

 

Browse for the header image file on your computer and make sure you select “Instead of title and description” (also, do not select ‘shrink to fit’).
SAVE! ALL DONE!

 

NOTE: May 2013 – Issues with uploading images to Blogger – there is a fix!


When uploading png files with transparency, there has been an issue with the background being forced to black. YUCK.
There is a fix (worked for me) that was provided on the Google Help Forum.  Here’s what you have to do:

  1. Go to your Google+ settings:  https://www.google.com/settings/plus
  2. Scroll down to the Photos section.
  3. De-select Auto Enhance “Automatically enhance new photos.”  Your photo preferences will automatically save.