Thank you guys! PowerPoint just has to may hidden features
Phil, I cannot seem to find Picture Shape. It just not there. All I have is picture border, effects and layout (which turns it into smart art)
Dave your suggestion I can find and works excellent.
Jeanette also replied via Twitter and she made a quick screencast on how to easily fill a shape with the picture enabling the shape features like transparency and such. :http://www.screenr.com/9Lx7