Theme images upload properly when the "banner title bar" box is not clicked. However they do not upload when the box is clicked.
I'm sorry, but this is utterly impossible. Remember, the skin creates the album, based on your settings choices. At that point, its job is done. The skin is not involved in uploading in any way, shape, or form. The upload is just a mechanical copying of files from one computer to another, and the skin plays no role in that.
So, if the album previews correctly, any subsequent problems are not the responsibility of the skin. Does the local preview look OK? If it does, but the album looks wrong when viewed from the server, that can only mean that you're not refreshing your browser cache, or you're not uploading all of the files that need to be uploaded.