Importing an image into iMovie

We were having trouble importing an image into iMovie. We wanted to overlap the image of a Royal Air Force Roundel into the 'O' in the title of out trailer (FLUOXETINE). However everytime we attempted to place the image into out trailer it was not merging. We looked on YouTube and found a clip which explain how to do it and explained what we were doing wrong.

The reason that iMovie wouldnt let us import the image was that we did not have the advanced toolbar turned on which would allow us to put 'picture over picture'.