I haven't dl'd but judging from the preview,you are indexing the entire image,which rarely works good. When you index images for mugen, you are limited to a certain number of colors(256 specifically) so with an image like that one where there are many colors(green,brown,orange,brown,yellow,blue,red,and all the different shades of those colors) it tries to take ALL those colors into 256 colors which is basically impossible(which is why the stage quality probably isnt as good as the picture was)
There's a few ways to fix this. You can cut out the jewels and add them seperately,or since you say you're just starting out, do what Lightflare said and use Cybaster's Stage Tool,which does almost all the work for you and will make your stage look better. Also, a floor is always nice ^_^
As Phantom said,the images you're using are blurry so even after fixing it,it probably wont look super great. But there is always room to improve ^^
In regards to your file issue, use winzip or winrar and compress all 3 files into one.