Aug 2 2006: After all the comments I've been getting about this, I've decided to combine the two instructions posts into one. Now that LJ has created a new free Plus account type, there is no longer any need to manually add your images and moods into each entry. Since the Plus account type has all the features of a paid account, you can install your mood theme like you would with a paid account, and if you wish to revert back to a Basic account later, your mood theme will still be installed on your journal.
If you currently have a Basic (free) account, then just go here and switch to a Plus account. You can skip the page that asks for your information for advertisements, unless you want to keep your Plus account later. Then follow the instructions below to install your mood theme. Once it's installed, you can choose to keep the Plus account or go back to Basic. Again, if you go back to basic after installing your mood theme, your mood theme will still be on your LJ. If you ever want to change it, you can just go back to a Plus account and make your changes.
If you can, I'd suggest using the admin console. While the custom mood editor is nice in theory, it is very temperamental, and freezes your browser while it registers every image. But, if you're very patient, that might work for you. Otherwise, try the admin console first. It's not nearly as complicated as it looks.
( using the admin consoleCollapse )
( using the custom mood theme editorCollapse )
Before you comment with any problems with your mood theme upload, please READ THIS TROUBLESHOOTING POST.