I found this out reading How To Xbox 360 magazine. This is not copied exactly from the magazine cause it cost ten dollars and I just read and remembered it.
Step 1: I prefer to use some type of USB device so like your Ipod or PSP are pretty good choices.
Step 2: Find the image you want.
Step 3: Download said image
Step 4: Plug in your USB device. For Ipods enable disk use from using Itunes. For PSP’s if you have a Digital Video Camera. You may have the plug for the PSP then. Check the USB 2.0 side and the other USB side. If it looks like it fits in your PSP then try it.
Step 5: Move the image into your USB device. Access your device by clicking on my computer. Then a list of devices should show up. For instance when I plug in my Ipod it shows up under Ross’ Ipod. Open the device through the computer and just drop it in there. If it is a PSP drop the photo in the picture folder.
Step 6: Plug your USB device in the Xbox 360. There are two USB port on the front of your Xbox 360 and one on the back. Any of the port will do.
Step 7: Go to the media center blade on your 360. Click on picture in the 360 media blade. It is above music. Look for your picture. Once you see it, the Y button should be press able when you have the picture highlighted.
Step 8: Follow the on screen instructions and say yes to changing the Background. Now you have whatever picture you downloaded for your 360 theme.
I for instance have a picture of Burning Gundum From G Gundum doing erupting burning finger as my theme now.
If there are any issues email me at [email protected]