It's the theme called "Movie 1", right?
I just took a project and applied that theme, I can still change the thumbnails.
I don't think the theme is the problem.

I don't get it then...
It doesn't really give me much in the way of options to place a picture in there. I can open up the FILM NEGATIVE in a graphics editor, but it doesn't do what I am guessing it is supposed to do - and the fact that the START TIME is greyed out makes me wonder. I really don't want to start this project over because it was a pain getting the navigation to work properly, but I am not sure if I have much choice...

Makes me wonder too.
Highlight the clip and then do the following:
On DVDA 2: Button Properties > Graphics > Thumbnails > Start Time.
On DVDA 3: Media > Thumbnail Properties > Start Time.
No reason this shouldn't work.

Under the "Thumbnail properties" - is the name of the media file valid?

I am using DVDA3

If I highlight the clip, it doesn't give me the properties you specified - I get this
1) General
2) Track media
3) Colour Sets
4) End Action
5) Remote buttons

Only with the buttons do I get the MEDIA option in Properties.

My scene tree looks lke this :

CHAPTER.dar
Project name folder
Project name
Button links ( 8 of them)
Button links
Button links
Button links
Button links
Button links
Button links
Button links

DVD file.

I'm getting ready to go to night school but, when I say to highlight a clip, I mean to just click on it (button link in the main screen) once. Then go to the menu on the right hand side and follow the steps I listed. I'll check back in a few hours to (hopefully) see that you got this worked out :-)

Well, I think I figured it out, sort of. I went and inserted a scene selection and it brought all of my buttons up (not the ones I wanted) with thumbnails. I am really sort of confused how this all works and why when you insert a button it didn't do it for me before. I dont' know if it is the order in my scene tree or something else I am doing, but it seems to work. I am going to have to get a tutorial on this because I have obviously missed a step somewhere along the way...now hopefully burning it will work!