Yep, your code isn't quite right. First, you should use CSS for this instead of the depreciated 'background=' tag. Replace the td tag that controls the center of the layout area with this:
Code:
<td class="background1">
Then, open up skin1.css and add this:
Code:
.background1 {background-image: url(images/palm2sm.jpg); background-position: 50% 50%; background-repeat: no-repeat;}
That should do the trick.