Image overlays can be tricky based on how accurate the image may be. There is no exact method for perfect overlay, but here are some tips beyond what you might find in this Google Earth Overlay tutorial (which is worth a read).

1) Set the opacity slider so that you can see the outline of details in your image as well as the underlying satellite imagery. This will help with positioning.

2) When re-sizing the image, hold down your shift key to keep the image proportions to the right size. At some point you may need to tinker with the image proportions to get your image to fit the 3D map, but for the initial process I recommend keeping proportions steady.

3) In between each image resize, set one of the corners of the image to it's right location, then re-size again.

It takes a bit of practice to get better here, but I hope these tips help. I'm sure other people may have some advice, and of course, it doesn't hurt to do a Google search for image overlays. ;)

Mark