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Well I've figured out how to do it, so I answered my own question. I'm going to write the answer here just in case anyone else needed to know. If you have any questions about my explanation just PM me. Well here it goes.

1st: Start a new scene by going to file -> new scene. Then in the Models menu select Get -> Primative -> Polygon Mesh -> Grid.

2nd: Now you will have a square grid in all of your viewports. After that you need to get to the grids properties menu. You click this button located over the 3D window: (See screenshot)

3rd: The grid properties menu should pop up. Now in here you need to give the grid zero subdivisons. In the U and V Subdivisions box, set both of them to zero. It will automatically default them to one. In the U and V Length box, you need to set these to the size of your picture. (ie: 456 X 658 would be 45.6 in the U Length and 65.8 in the V Length, and yes you need those decimals in the number.) So the picture I'm using is 400 X 268 so I would put 40.0 in the U Length and 26.8 in the V Length. Your grid will size itself in the background. (See Screenshot below for visual)

4th: Now when thats all done we need to position our grid on its side so we can put a reference picture on it. So we select the grid and hit C on the keyboard. A sphere like object will appear in all the viewports. Play with the tool to see how it works. Left-click on one of the rings and drag it to see how it works. Make sure to undo though if you do mess with it. You need to rotate your grid so it is standing up and facing you in the right viewport like this: (See Screenshot) TIP: If you just type 90 into the X and Y panel off to the right in the rotate tool it will do it for you.

5th: After all this we need to go to Property -> Texture Projection -> XZ. No screen will pop up or anything so don't get worried. This tells where the texture should be applied on the mesh.

6th: Now after that you need to go and select Get -> Material -> Phong.

7th: The phong menu should come up but if it doesn't hit the properties button and browse for Material:Phong. If your confused look at the screenshot below. In here you need to hit that plug like button next to the color box and click Image. In the next screen by Image click New.

8th: In the next screen, by Image, click New and browse for your pic. Then after you have your pic go to the button on the 3D view and select Textured Decal. Viola. You now have a reference image to start modeling from.

Whew. That took a long time to write. Hope someone finds it useful and actually reads it. I'm out.