How to create a new material from an image?

Hi,

I'm attempting to create a material from an image file.

I'm missing something... some critical piece of information I have not been able to find in the Help or in the forums...

I can create a new Pallett and a new material name, but cannot find out to assign the image to that material.

Any assistance (simple steps for a simple fellow please) would be appreciated,

Thanks,

Michael