Yes, the tiling of the image seems to be a problem when it is added as a background. Perhaps the original image size is the problem. You could try resizing the image to make each pixel larger (ie convert it from 300dpi to 100dpi) without actually resampling it. You would need a program like photoshop to do this though and I don't know if it will actually work but in theory it should change the size of the tile.

Try removing it as a background and then add it as a floating object on the cover page and send it to the back. You might need multiple copies but this would give you the result you wanted.

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Andrew Lockton
Chrysalis Design, Melbourne Australia