(See http://forum.bytesforall.com/showthread.php?t=11814 for details on getting the rotating header to recognize images in Dashboard > Media on WP Multisite.)

The regex used in functions/bfa_rotating_header_images.php doesn't work for images that have been uploaded through Dashboard > Media. WP adds an image dimension to the filename, which Atahualpa is not looking for (eg atahualpa_header_2-1024x100.png). The following modification to the regex worked for me:

$files = m_find_in_dir(get_option('upload_path'), 'atahualpa_header_[0-9]+(\-[0-9]+x[0-9]+)?\.(jpe?g|png|gif|bmp)$');

You shouldn't be using the media upload to load to the atahualpa/images/header. As I understand it, the media should be loading to wp-contents

That's correct for single-user installations of WP. The code clearly is written to work differently with WPMS/MU, where it tries to look in the upload directory for that blog. And even if it weren't intended to work that way (which it is ) then it *should* work that way, as it's far easier for users to use the media uploader than an FTP client.

I take back what I say in the original post here. The source image I was using was incorrectly named (I had pulled it from another WP installation, so it was getting double-resized.) No changes in the regex are needed.