Solved my own problem. The issue is NOT the template or the images the ISSUE is PLESK. I have posted the link to the solution as I found it and the key "words" from the solution in case that link ever does not work.
FOUND SOLUTION:
To all of you who use Parallel Plesk as a hosting control panel, you’ll be glad to read this post.
Finally, after a year of permissions and ownership problems, I managed to better understand and successfully setup Joomla on Plesk without having to compromise security by 777’ing directories or files!
So essentially, it goes like this:
If you’re using Plesk, your domain parameters will allow you to set the domain to use FastCGI as a PHP interpreter. BY ALL MEANS, DO IT! By setting this, you are forcing PHP to run as the FTP user and not the Apache user. This is the source of problems when using Plesk to work with PHP solutions! The only way around it is to set directories to 777 ... which is a MAJOR faux pas!
So, now that PHP is running as the FTPuser, you can leave ALL files to 644 and ALL directories to 755 which is what the Joomla standards suggest. Your Joomla instance (running PHP as the FTPuser) will now be able to write in your domain without spurring out a bunch of permission problems anymore.
LINK TO FULL POST
http://forum.joomla.org/viewtopic.php?t=601093Giving back to the community in the hopes that it comes back to help me in the future.
Thanks,
Joe