I've seen that before, that happened when I was editing my "global panels.xml". I removed the correct line, but I replaced it with one paragraph instead of the two you're supposed to paste in.
From what I've read, the backgrounds are in the wrong place also. They shouldn't be in a skin's directory. They should be in (presuming it's on your C drive and in the default folder): C

Program Files\Sports Interactive\Football Manager 2005\data\graphics\pictures\backgrounds. The installation ZIP should then make a directory in there called "england", filled with all of the pictures (and the included "config.xml").
I believe the problem is with your "global panels.xml" file. Delete the folder that the Newcastle skin is in, then re-install it, and then edit the "global panels.xml" file again, making sure to follow the instructions down to the last letter.
If THAT doesn't work, edit the "global panels.xml" file of another skin, such as the default skin (Metallic), load that skin and see if that works. If it does, it's a problem with the Newcastle skin not supporting it and I recommend installing ARFC's Match of the Day 2 skin, or for ultimate viewing pleasure (seeing as the menus are slightly transparent, allowing you to see a lot more of the picture), Effem, or for even MORE viewing pleasure (seeing as the menus are
completely transparent), Remix.