In the material editor, change to 'mapped picture' in the coloring mode box. Load your picture. It works best if your picture has a large white background (if you use a small picture...like the 100x100 pic I used, Vue tries to repeat the picture over the surface of the object.)

In the effects box (upper right), choose 'world-cylindrical' mapping. Then in the mapping box (lower right), choose 'cylindrical'.

In the picture scale and offset boxes, I found it was just a matter of trial and error to position the picture. Make a change then watch your main camera preview (click on the preview to force it to update if needed). I suggest scaling it first, then using the offset to position it.

Write down the settings you chose for picture scale, picture offset, and mapping (you will need them for the transparency section).