First, thanks! adding to the .htaccess file worked! if you don’t mind, could you tell me more about what that actually did? I am really new to all the inner workings code wise.
As for the background image problem. I exported the image again as a JPG, except I lowered the DPI to 90 as recommend. I am not getting error, but when it pops it into the previewer it is really small. I was having this problem before with my smaller sized 240DPI images that were about 500×300 (I am assuming that the reasons these were even uploading without the server error was due to their smaller size).