Adding Images to Default Space Problems

Hi,

I have uploaded a theme to my site which is located at http://scottsaunders.hostsnake.com/wordpress/ however there are some problems, the template had some spaces for graphics such as a header and adverts but i dont have a clue as to how to add them on. Do I just design these with photoshop at the size that the advert is telling me and then somehow use dreamweaver to attach the images to the code or is there a better way?

Thanks

Scott