Well guys I had to play (gee, that didn't take long did it? ). I did get it loaded up fine through Impulse, and ya it does just change the main image while leaving the default blue bottom panel, user logon blue backgrounds /positions / transparencies, Windows flag and Microsoft verbage. The main image does go over/ cover up the top panel and it's stretched (or squished) to allow room for the bottom panel so the aspect ratio is thrown off a tad.
On the other hand, the new version does make it really, really easy just to plug a new logon background in there which is kind of nice. So I guess the old version is better for a thorough skinning job, new version is better for quick and easy plugging in of new images. A lot might depend on how tired a person is of default MS blue and WinXP logo.
Anyway, how I did it (might be overkill, but it did go so well)[boring stuff]:
All from an Admin logon (never hurts to mention that)
Old logon studio - applied default WindowsXP Logon theme
Copied off old login studio directory with old logins to another directory to stash away
Disabled antivirus, Uninstalled old login studio from control panel - add/remove programs
Deleted old login studio directory (with logins) which uninstall left behind
Opened Impulse, unchecked "show pre-releases", Disabled antivirus, installed New Login Studio
Started up New Login Studio and started playing