There is a genius amongst us! Just in case you haven't read the comments on the post about the blog header problem, Margaret over at BooksPlease came up with the solution. She gave me permission to post her comment as a blog entry, so here you go:
Nan, if you go to Template and edit Header, then choose the setting under placement that says "Instead of title and description" this puts all the photo in the header. It removes the blog title though, so I added it to my photo (in Photodraw)before adding it to the header. I hope this makes sense - it worked for me.
Me, again. I didn't bother with the photodraw or photoshop thing. I decided I liked the picture just fine without the name on it, and instead put a little picture on the sidebar with the blog name. So, thank you so much, Margaret, and I hope everyone who has had trouble will have the same success.