I ended up using a long work around. I copied the existing background files to the /media/internal directory, turn the pics into b/w (they look a good deal better this way), copied them back to the /usr/palm/applications/com.palm.app.phone/images directory.
Works, but I'm def going to try and get SFTP working.
I've attached my changes in case anyone else want to take a look at em
Tim
phone_2009-15-06_003639.png