Files to use are .gif,*.jpg,*.png files only. As far as the size, Not sure on that. My header size is 982x134 Just play with it. I hope this helps.
There must be something else going on. What browser are you using, and do you have any extensions that blocks scripts or does anything like that? I've tested to be sure something isn't broken on our end and I'm certain everything is functioning properly. I've confirmed that a .jpeg image file type works with our system, it uploads. I looked into the limits of the files we accept, and I can't imagine a scenario where the image you're trying would get anywhere in the same universe as those limits unless you're doing something really crazy with this image haha.
One thing I would try just for sanity is try to upload a different image. Just to see if it uploads at all. Try uploading an image elsewhere like the background or in a forum post. If you can upload other images for the header or elsewhere, then there's definitely something specific about the particular file you're trying to upload. Maybe check to make sure you don't have some weird characters in the file name like slashes or something, thought I don't think Windows would even allow you to do that.