1. that is not the correct way to go about this. Now you have reduced the logo size it is the menu block that is driving the header height - so you should reduce that with CSS:.menu-block {
margin-bottom: 0;
margin-top: 10px;
}
remove your code forcing the header to 70px
2. You background image is not working because the url that you specified does not exist.
3. Learn to use either, Firebug in Firefox, or Chrome Developer Tools in Chrome, they will save you hours on things like this and they're very easy to use. You should use firebug to identify the styling that you require and then write some custom CSS - This is considered as a customization request which falls way beyond the scope of this free support forum. You can always try to post your request in our The Marketplace forum and get (paid) support from someone that is willing to do this.
Regards, Mark.