There are two things here: the size of the image you're using for background, and the resolution (DPI). The DPI has to be the same or better than the DPI you render in. I use 72 pixels per inch for both and it works fine (that's for web images. For print you need to work in much higher res.). The size of the background image can't be less than the window you're going to render in, but it can be bigger. The other thing is always render in a new window: in the "Render Options" dialogue check the new window option, and set the dimensions to the same as, or less than your back ground image. Check the resolution as well. That lets you render images larger than your working window, too. I've found that the "blocky" background you're talking about only happens when I render in the main window instead of a new one. Of course, the other option (easier for some people) is to render on a plain black background and use photoshop or PSP to import a background image.