block compression (DXT/BC) requires multiple-of-4 image sides

The editor background image needs to be a DDS format image with width and heights that are both divisible by 4. Because our image is square, we’ll use the game texture convention of using square numbers. (i.e. 512, 1024, 2048, 4096)

Whilst images of 8192x8192 should work, I have experienced issues loading such large images in the editor, so you should use a 4096x4096 image to begin with before trying a larger image.

Ensure that that the exported DDS file fits the dimension requirements, and is exported as DXT5. Mipmaps are not necessary for the image.

https://scsmoddingguide.github.io/mappingguide/newmodule/2_import.html