Well, for starters you can easily replace the header graphic by making your graphic the same size, give it the same filename, and upload it to the same folder (over-writing the existing graphic). This method is probably easier than going into the theme’s code to change the filename.jpg, but if you read on I will show you where the code is anyway.
From what I can tell on the demo, the header graphic is located in the theme’s folder, at something like this path:
yoursite.com/testrun/wp-content/themes/4415/images/header_1.jpg
So just make your own header_1.jpg and put it there.
Then, I noticed that theme has header_2 and _3 and _4 and _5 as well. I think #1 is for the homepage, #2 is used on category pages, #3 is on Single Post, or something like that. You can kind-of read it in the code, even if you don’t understand all the code. So you need to do the method I suggested, but 5 times – depending if you want 5 different headers, or all pages to show the same header graphic (in that case either erase part of the code, or duplicate your graphic and rename it 5 times to match).
Now let’s look at that code. Both questions you ask, are in the header.php so open that file with a text editor, make changes, and upload the header.php overwriting the old one (Remember To Keep A Back Up Copy Before You Modify).
The relevant code for the menu, and then the header graphics, is what I paste below. You should see where to replace the navigation links with whatever links you choose.
<ul id="nav">
<li><a <?php if (is_home()) echo('class="current" '); ?>href="<?php bloginfo('url'); ?>">front page</a></li>
<li><a <?php if (is_archive() || is_page('archives')) echo('class="current" '); ?>href="<?php bloginfo('url'); ?>/archives/">archives</a></li>
<li><a <?php if (is_page('about')) echo('class="current" '); ?>href="<?php bloginfo('url'); ?>/about/">about</a></li>
<li class="rss"><a href="<?php bloginfo('rss2_url'); ?>">RSS</a></li>
</ul>
<div id="header_img">
<?php if (is_home()) { ?>
<img src="<?php bloginfo('template_url'); ?>/images/header_1.jpg" width="970" height="140" alt="<?php bloginfo('name'); ?> header image 1" title="<?php bloginfo('name'); ?> header image 1" />
<?php } elseif (is_single()) { ?>
<img src="<?php bloginfo('template_url'); ?>/images/header_2.jpg" width="970" height="140" alt="<?php bloginfo('name'); ?> header image 2" title="<?php bloginfo('name'); ?> header image 2" />
<?php } elseif (is_page()) { ?>
<img src="<?php bloginfo('template_url'); ?>/images/header_3.jpg" width="970" height="140" alt="<?php bloginfo('name'); ?> header image 3" title="<?php bloginfo('name'); ?> header image 3" />
<?php } elseif (is_archive()) { ?>
<img src="<?php bloginfo('template_url'); ?>/images/header_4.jpg" width="970" height="140" alt="<?php bloginfo('name'); ?> header image 4" title="<?php bloginfo('name'); ?> header image 4" />
<?php } else { ?>
<img src="<?php bloginfo('template_url'); ?>/images/header_5.jpg" width="970" height="140" alt="<?php bloginfo('name'); ?> header image 5" title="<?php bloginfo('name'); ?> header image 5" />
<?php } ?>
</div>
Bingo! What else?
by the way I have never used this theme but that’s what I would try.