I just resolved this by recreating a new skin called blank2 which never had an image in the skin.
Thanks Lee for your clear explaination. There must be something wrong with my hidden files folder settings.
I do not always see my hidden files, even though I know it has the right setting for the folder. Other folders like windows does show me hidden files, so I just move on. that was the very first thing I checked because of course I have run into those files when copying and pasting. Its great to have a guide in the Jungle! ThanksI need to go ask another question about the Cache Setting.