The code uses the title of the event in the calender to display above the countdown.
I suggest you create a calendar specific to Countdown Events and set it for Admin view only; as long as you set the correct calender ID in the code it will still be picked up.
To have a picture make the Title of the event in the calendar the HTML to display the picture. For example in the forum I look after I have the following as an event title...
HTML Code:
Halloween Evening<br /><img src="files/bv/images/halloween/pumpkin.gif" width="140" height="130" alt="">
...which shows as the text above in the calendar title but displays as text and a picture in the countdown.
You can see this at
http://www.buckshawvillage.com/forum.php
You can use whatever HTML you like in the event title.
The code on that site is set up a little different to that posted here. Seconds are not shown until less than 24 hours. At zero there is a firework display over the page which lasts for 1 minute. Other than that it functions the same and the HTML title will work fine.