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Easiest way:

1. Convert jpg to png (use paint.net or similar - perhaps even paint will do this)

2. Rename to background.png

3. Copy it to the skins\[skin name]\mediafolder

4. Clear skin cache

This will work for most skins.

The other way:

Modifing xml's

(not gonna bother writing it, as opt. 1 is OK )