adding header image - it distorts!

Hi.
I've seen this issue in some other areas of my site where I've tried to add a photo/image and it gets cropped. I've tried to resize to the specified size, but it still gets cropped or enlarged and distorted.
In this case, I'm trying to add a logo to be the header of this Canvas theme site. I've sized the logo to be 980x243 (I used white space around the logo to make it this big) (site is 980 wide) and the image then appears enlarged so much so that only a portion of the logo is visible (screenshot 1).
If I use the logo in original form from the site I grabbed it from, it still distorts! I've spent hours on this and it's driving me crazy because it seems like it should be so simple. Can you help direct me to a resource to help with this?

Thanks,
John