To add sidebar in your phpbb3 template you have to edit two files, overall_header.html and overall_footer.html. These files are in the /forum_root/styles/template_name/template/ directory, where forum_root is the directory where you install your PHPBB forum and template_name is the name of template you want to edit. Default template is prosilver.

<table id="mainbody"><tr><td id="left_sidebar"> <!-- Your sidebar html code here--> </td><td id="right_column">3. Add the following style inside the head tag.
<style>
<!--
table#mainbody{ width:100%; }
td#left_sidebar{width:200px;}
//Add style for your sidebar code.
-->
</style>
4. Open file overall_footer.html for editing.</td> <td id="right_sidebar"> <!-- Your sidebar html code here--> </td></tr></table>4. Open file overall_header.html for editing.
<table id="mainbody"><tr><td id="forum_body">
//Add the following style inside the head tag.
<style>
<!--
table#mainbody{ width:100%; }
td#left_column{width:200px;}
-->
</style>
To insert image on sidebar page you have to upload the image file on your server. You can upload it at any directory, but the convension for PHPBB is you upload it in /forum_root/styles/stylename/theme/images/ directory.
If your style is prosilver then stylename=prosilver.
Now to display the image use html img tag with
src='{T_THEME_PATH}/images/imagefilename.gif'
Here {T_THEME_PATH} is a PHPBB variable which always pointed to your default style directory.
I did everything you said and it worked. But I can't figure out why my sidebar appears halfway down the screen. Is there a way to make it at the top?
Add style for sidebar td#{vertical-align:top;}. For left-sidebar use style
<style>
<!--
table#mainbody{ width:100%; }
td#left_sidebar{width:200px; vertical-align:top;}
//Add style for your sidebar code.
-->
</style>
<style>
<!--
table#mainbody{ width:100%; }
td#left_sidebar{width:200px;}
//Add style for your sidebar code.
-->
</style>
<style>
<!--
table#mainbody{ width:100%; }
#mainbody td{vertical-align:top;}
td#left_sidebar{width:160px;}
td#right_sidebar{width:160px;}
//Add style for your sidebar code.
-->
</style>
3. At the end of that file add the following lines.<table id="mainbody"><tr><td id="left_sidebar"> <!-- Your sidebar html code here--> </td><td id="forum_body">4. Open file overall_footer.html for editing.
</td><td id=?right_sidebar?> //Your right sidebar code here. </td> </tr></table>