Hi there,
First, you don't have to downsize the picture -- BigOven for Windows will do this for you.
Sounds like you may be clicking the "Paste" button, which is only used if you first copy an image onto the clipboard. The way you should do it for a file is:
1) Click "Browse..." to browse to a JPG file
2) Highlight the file and press OK
3) BigOven should display the image,
-OR-
1) Open the image in your favorite image-viewing software that allows copying an image to the clipboard. (that is, copy the binary image itself to the clipboard, not the filename. This is usually done through right-clicking on the image itself, and choosing the "Copy" option; sometimes, the picture itself needs to be selected first, depending upon your source viewing software).
2) Click "Paste" in BigOven.
Regarding Favorites, please keep in mind that BigOven sometimes takes a moment or two to toggle the "Favorite" button on (GREEN) or off (RED). Give the page a chance to refresh.