Please, KingJim, accept this six pack as a token of appreciation. You will now be able to see what you have created so far - now its starting to take shape isn't it. Now we need to start making your page look cooler with pictures and a nice background. If you have a pic you really want to use but it is another format you will need to change it to one of these three. Any decent image editor will be able to do this for you.
Lets go for a simple plain color background.
Hey presto, you have a colored background. I.e where the .gif is stored. To add a picture, make sure you know the URL of where the pic is stored. It is nearly always better so store pics on your own system rather than put in a link to somebody elses site. The html itself does not code a picture - it is simply an instruction to the browser to display a certain picture, from a certain source, in a certain place.