Uploaded Banner Image not appearing correctly.

I have uploaded a banner image in my theme-required image size of 1400 X 200 pixels.

It shows up great once uploaded. I have tried both cropping and skip cropping, both with the same result; the published image has some of my dog image and some of my text, but it is all blown up, grainy and with a grey background instead of white.

I have 2 screenshots showing before and after, but cannot figure out how to attach them to my post. I have Googled this problem extensively first, and seem to be following all the advice and steps properly.

Any advice appreciated; I am new to WP system, and a little lost.