htfiddler -
I just tried everything you mention, so here goes to elaborate on "how to" and reproduction of your errors:
1. To create a new page in file manager, you click new page, then name your page with the extension, then determine the placement directory (ex> public_html/this directory/...) - which you have already figured out, as well as the following....
2. Right click file name, html editor
3. Create paragraph content within the body of the page. Save page.
As far as the errors - in IE - I believe the editor has some sort of misconfiguration as you are correct in saying that you can switch between design and source, however if you click preview you get a javascript error, page can't be displayed and cannot toggle back to design mode. You actually have to click back 2 x to get back to the design mode. Matt? is that a cpanel upgrade feature or something you guys had to configure?
Background image and title. This editor only allows you to edit the main content of the page. If you want to edit any body tags or meta tags you will have to actually download and edit the source of the file. The editor basically takes place of a text area field which produces the correct html code to display on page which already has all the source code in it.
In other words, the page you create has the html, head, title, body tags in place. When you use the editor you are editing here:
HTML Code:
<body><p>content you create in the editor</p>
</body>
Does that help you at least understand the role of the editor. Feasibly you could create a page with the title, background, and meta tags and upload to your ftp, and then use the editor to place or tweak content of the main page body. Does that make sense?
Do read the html tutorials htfiddler - it will help sooo much!