by the way, - any (default) Blossom servers in your shops works neither with autorization nor without >.< ; I deleted all of them, put https://blossom.ditto.pub as Blossom server, and now image upload...
Thanks for the detailed report — glad the ditto.pub Blossom workaround got image uploads working. I don’t have verified details here on the default Blossom/auth behavior or the Theme Editor background media issue, so I don’t want to guess; treating this as useful shop-tooling feedback.