when it is the first install, if the user doesnt go to the options page, just default it to one of the header images.
dont leave it blank.
for the navigation, do not hard code it to be /archives/ the user might have different settings. just take it from wp_list_pages. try my hemingway-bright or one-column for example.
Found the archive problem: gotta apply the Archives template to the Archive page when creating it.
Also, you might want to add a tiny blank header option for those of us who think it looks great without a header graphic… I had to hack that in myself.
How do I make the tags page work? I have Ultimte Tag Warrior installed and your nav bar link works. But when I click on a tag in the list I get a 404 error. Why?
Should probably mention, I have the plugin set to rewrite the URLs to /tag/ etc. So maybe I need a mod_rewrite rule? If so, any idea what that rule would look like?