Well, just now, after clicking the Add Theme button as you directed, then browsing in the IPS_Magnum_Theme.xml and installing that, now "IPS Magnum theme" appears as a separate theme entry alongside my original install of Magnum, which was renamed to "LF_Fractal." For some reason the last time I did this procedure it did not appear as a separate entry.
So now, I have LF_Fractal, which is broken, and a fresh install of IPS_Magnum. I go to the fresh install, clear the background gradient field of all values, upload a background image, save and reload, clear the site cache, ctrl-F5 the main site to do a fresh reload, and no background image. There are a couple of other issues (with other 3rd party apps, unrelated to this) which have been fixed with the fresh install, but in no case will my selected background image show up.