I can't get backgrounds to install on my 650 with zlauncher.

I've tried with a several times. And can't get it to work. I have 10.5m of memory free on a Treo 650. And the message I get is

Memory: out of space

is anyone familiar with this? And can you help me get a background on it?

The pix I'm trying to load is 160x 160. I s that the right size for the 650?