now click that and you will see the following image browse for the image you would like to add as the blogs header it can be on your computer or hosted on another server
Now if you would like to add it the other way go to the edit html tab and find the following CSS code it depends what template you have this is based on the one from my previous tutorial which can be found HERE.
and add the code Ive highlighted below of course change the URL to where ever you have the image hosted also you may need to change the height and width depends what size your image is and you may need to optimize it for the web so your site loads faster
so now you know how to add an image to the blogs header
UPDATE: i have notice lots of people's blogs header has shrunk i have managed to come up with a fix which works for some depends what template you have first make sure you download a copy of your template next add the following CSS code you may need to alter the height and width to whatever you need
if this helped dont forget to leave your comment and let me know
Update: i have wrote a new fix here