Why's the Image Menu Disabled?
Because you haven't selected an image to play with. Click on any image you've added to your label as a foreground label (if you want to edit your label's background image, go to the Background menu instead). This will make the image the selected object, and it will grow a red sizing frame & titlebar, and a toolbar will appear underneath it. Now the Image menu should be enabled, and choices you make from this menu (excluding the choices for adding or downloading more art) will apply to the image you've selected.
If you don't have any foreground images on your label, click on the "Art Search" or "Art Browse" tabs to add some. Once you've found an image there that you want to add to your label, just left-click on its thumbnail and drag it onto your label.