If you are using the Picture Window template, your blog does not automatically display an image header, even if you upload one to the Header section. You must edit the blog HTML to add your own ...

In the drop-down list, select any of the built-in template styles you want. If you want more Header templates, click More Headers from Office.com. You can also click Edit Header, and you will see ...

If your header image does not appropriately fit the template, you can resize the image dimensions based on the default header. Visit your blog with the template's default header intact.