Ok maybe I'm not the brightest crayon in the box but this wasn't very clear to me so I am posting this for anyone else confused by how to make a simple custom login using the default built in tools not an entirely new login system.
Of course you need to edit your images i wasn't looking for anything very different from the basic login panel just more polished.
The part that stumped me was the correct paths to the css file and images... this isn't so obvious as it seems.
EDIT ALL 3 header files
The correct path to your custom theme css should be
now open the style sheet itself you need to edit the path to the images
/unprotected/YOUR CUSTOM THEMES NAME HERE/style.css
the image location will be
/unprotected/YOUR CUSTOM THEMES NAME HERE/images/button-bg.jpg
do this for all the image paths
upload your completed theme then go to Tweak Settings and enter the name of YOUR new theme
that's ALL nice and simple
See the attachment for how it looks... this is without branding and titles yet but you get the idea.