How do I load a sprite file from inside a running game?

OK I am creating a sandbox pinball editor and I want my users to be able to create objects using their C2 and save those as sprites and I want my editor to import that sprite file to be used.

I have never loaded an image into a sprite before and nothing I do seems to be working.

I created an empty sprite on screen and used:

Keyboard on P pressed

Load image from "sprite.png"

Nothing happens.

Where does the image have to be stored? I assumed it would go in the files section but can you choose where to load it from and create a separate file?

I am sure this is such an easy thing but I am just not getting it!