Go to www.photobucket.com and sign up. You can also login at Photobucket with you Facebook account.
Once you are logged in, upload your image that you want to use as your header on Blogger by pressing green button that says Upload now
Once your image is uploaded, point your cursor to that picture and click Direct link and the link of you picture will get copied
Now return to your blogger header gadget and now instead of uploading that picture from you computer, paste the code in the field that says from the web. Finally hit SAVE and problem solved