You make a 256x256 pixel PNG picture for your world.
If I do it from a jpg, and covert it to a png using Microsoft Paint after cropping it and reducing it in size, CAW complains it isn't a 24 bit PNG file.
If I do it from a screen cap either <PrtScr> from full screen mode or <Alt>-<PrtScr> from windowed mode, then CAW will accept the PNG file.
What's up with that? And I think I just answered my own question about a work around for it...