Currently there doesn't seem to be a way to select a photo form the current library or album to be used as the thumbnail or the background. We have to manually upload, which I would think would create a duplicate file – or we can link to a photo. It would be convenient to see a grid of small thumbnails representing the photos in the album as an option for selecting photos for use as thumbnails and backgrounds. I think an easy way to implement this would be to have them as part of the "..." menu for each photo. One option for album thumbnail and another for background.