Normally it is a quite simple process to upload image to your website if you have FTP or File upload access to the server that host your website. Blogger does not support uploading external files or images. List of possible way to upload an image to blogger template.
1. Have your own web server with FTP or File uploading facility.
This is not a good option for someone who just started blogging or cannot afford or do not have a own web server. If you are planing to rent a server that can be done at a very low cost.
Upload image to your server ( your blog is not host in this server) and give a link to the image.
2. Upload Images to Free Image server. (Best Solution)
Picasa Web Album is the best place to upload your images. Blogger is using Picasa is the default image hosting for blog post images. Upload the background images and button images to Picasa Web Album and provide the link to that file. It is free and reliable.
On the right hand side you can find the image link details and how to embed the image to a website information. Another option is to change the size of the image from a drop down menu.
Simply copy the Link to the CSS background property. There couple of more free image hosting services out there.
