One of the best way to add a image to Blogger Blog background or to any other place in your template is to upload it to the Picasa Web Album and give the link in the blogger template. However, If you are trying to add a wider image (eg 900px width) for some reason you will not get the original width with the image when you add it to the blog.
Simples way to solve this problem is to add the image to the blogger header with the original size and after adding it go to your blog and refresh it to see the changes. Right click on the image and open Image with new tag or copy the image URL. Then copy that URL where you want to display the image and you can remove the header image and apply the correct image.
I am not exactly sure why Picasa is reducing the original width when the image width go beyond some limit but this little trick give a good solutions for that.
