I don't think the dimensions can cause an error, but I got mine working a while ago (
http://puu.sh/kJJbw/a250ae0263.png) and has not had any problems since, so I know the function works.
If you want to see if the dimensions are a problem though, you can try 482x226, which is identical to the image I have in my template. If you want to try, try downloading this image (Right Click > Save Image As...) and change it to suit your mod. Make sure your LauncherPic in the entry.hpc matches your file name for your image.
If it still doesn't work, pack up your Campaign and upload it to a service like Dropbox or Mediafire and I'll take a look and see if I can find the issue.