Picture options grayed out

In Excel 2002, Office XP, when I insert a picture for the
background of a chart, it is squeezed and stretched in
the chart (though not in the preview). The picture
options are grayed out. I tried it with both JPEG and
bitmap graphics with the same problem.

Also, in the gradient fill, the transparency sliders are
inoperative.

Any ideas how to activate these features?

Ray