THe only way I know of to delete an image from the Color Nook is to connect the Nook to the PC and use Windows Explorer to delete the image (go into My Files> Downloads, etc)
Same with books, if they were sideloaded. If the book is something you bought from B&N, I believe that all you can do is Archive it, which removes it from the Nook but still retains it in your account. You can delete it completely by logging into your B&N account with your browser.
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