Distorted images in similar theme

So I decided to modify a theme I did, but I wanted it to be based on the previous them. I duplicated it on my hard drive. Changed the stylesheet (put the new name and info in the comments), made sure the stylesheet had proper line-endings and then uploaded the new file with a different name onto the server.

When I load the new theme everything but the images work out fine. They’re there- just totally pixellated and distorted. I realize this happened whe I did the same thing with someone else’s them as well… same deal. I wanted to modify a preexisting theme while keeping the original on the server to refer to. When I uploaded the copy with minor changes everything was fine, except for totally screwed up image files. It’s not that the links are broken or the images aren’t there… I even checked and uploaded the images from the working theme to the non-working theme in binary format.

Any thoughts?