See where I've circled in red? If you don't have that Edit and Label Buttons window active, hit F4.

You don't have to have the image saved to any specific folder, just know where it's located; I save mine to the specific folder I create for each remote type labeled for instance 'MX980 Images' or you can simply save to your desktop for simplicity for now. The constraints are 240x320 for backgrounds and in .bmp, .gif, .jpg or .png format.

Click on the 'down' arrow that I circled in red after you've clicked on the background you want to change (click the background on the window to the right of the remote, i.e. just the LCD representation, not the image on the remote, it will outline in red dashes if it's active for editing). An Open window pops up when you click down arrow. Navigate to the folder you saved your appropriate 240x320 image, click Open, image will be placed on the remote now.