After saving the sheet format, you'll need to re-load it before it will be active in new drawings. Open a new drawing, go to the sheet properties and Reload the sheet format, then re-save the drawing template and then new drawings should show the new sheet format.
How are you inserting the image? The Insert...Picture... menu item?
Remember that SW has two files, a drawing template (.drwdot) and a sheet format (.slddrt). Once you have everything looking the way you want, click File...Save Sheet Format. Next right click the sheet and select Properties. Make sure that the file name (next to the Browse button) in the Properties window is pointing at the sheet format you just saved. Finally, save the drawing as a SW drawing template.