I can’t be sure, but it looks like you have put your “background” image in the content area instead of using the Background Image option.
As you are just changing the background image, I would recommend that you use the Standard Header and add your image as the Background Image, as the height of the custom header will render based on the height of the content within the custom header.
The white line is because your image is wrapped within paragraph tags which have a 5px padding. The WordPress ‘Visual’ content editor automatically adds <p></p> paragraph tags around text or images.