How can I use a photo as background?

This would be cool, they do have it where you can set screenshots as your background and also you can edit photos on a computer and plug a usb in a put photos on that to use as your background.

Jetstarbaby, you can use any Photo from a USB Storage/ Media Sharing or Media Disc as a Background on the Xbox 360. Simply View a Photo and the "Y" Button will appear for "Use as background". It is an Authorized Function and Feature
of the Xbox 360 and will not get anyone Banned or Suspended.

I've been using my own Photos for years as the purchased Themes are simply very poor from every Dashboard after the original Blades Dashboard.

You can also add personal photos to your Dashboard background. This is what I do on Xbox 360 and Xbox 1. It makes it more "personal" than someone "supplying you" a picture just to add to your Dash background. I use personal photos on my Dash background.
There's one good thing about that.... no one can flag you for Copyright for doing so. And you don't have to pay for it...

My Dash background is of some photos I took at Auckland Zoo with my Sony CX190 which does 4k stills and 1080p videos. I transfer the data from my camcorder to PC to console... wolla...

As for gamerpics, I've never been really into them. Others could be using the same gamerpic too on their profile.

I guess it's down to personal preference. I'm just glad I don't have to put up with the unchangeable black bland Dashboard background anymore OMGoey it was giving me sore eyes ;DD

When you say it just "plays," are you highlighting the picture and pressing A? To set as the background you need to highlight a picture, press the Menu (old start) button, then choose Set as Background. Is that not working?

You have to open the picture so its fullsize then use the menu button on the fullsize picture then the option will pop up.