Hi there, welcome to IcyPhoenix,
I've moved your post because you are not using an IcyPhoenix board, you only use an Icy template on PHPBB.
please ask new questions in this section (unless you switch to an Icy Board
Now on to your problem..
You can't really expect to be able to dump a huge image in the header and expect it to work.
My advice would be to at least make the width fit the board's width because whatever you would do now ...it will never look great (unless we would make the board even less wide than it already is
It would be better to edit the image you're using, or pick another one.. and make it fit better or fully.
You can set the height of the header content in the stylesheet.css, just look for top_logo.