if the picture you want to put into a wad is already the right size and colour deapth, you're more than halfway there.

as fizscy said, it should have sides divisible by 16 units, though i prefer powers of 2(16, 32, 64, 128, 256).

it should also have a 256 colour pallette.

and it should be a .bmp image file.

now, wally can resize and set the pallette for you, but no-one knows how this part of wally works, cuz it sucks, and everyone uses photoshop or psp or something to do that bit.

so lets say you have your pic, and the sizes and colours are correct. in fact, lets say you have lots of pics, and they are all correct. put them all together in a folder, with nothing else in it.

open wally, and select File>New. choose Half-Life Package[wad3][.wad] from the dropdown and hit OK. a new, empty wad will open.

now click File>Batch Conversion

a dialogue box opens with some selections for you to make. the 'select soure' field should be the folder that you have your correctly sized/palletted bmp's in. use the button at the side of the field to browse to the folder.

the field for wildcards i cant explain fully, cuz i only use/know one wildcard. but if you put *.bmp in this field, it will convert all of your pics in one go. or wall* would convert everything starting with wall. (it may even try to convert wrong filetypes if their names start with wall too, so like i said,only have bmps in the folder) i suppose the other wildcards are standard stuff for people who use them in other things.

anyways, the last selection to make before you have a brand new wad to play with, is where to output the finished result. so in the output field, check the Open Package box. (if you have more than one wad open in wally, you will need to select the one you want from the dropdown)

with that done, hit Go.

save the wad with some appropriate name, normally in your mod folder.

go play.