There may be another panel open. Do you have a little handle icon somewhere on the right hand side? If so grab that and pull the panel down.

Is the image located in the same folder as your index.html? If it is in another folder then you need to reference the file path. Here's a link regarding file paths. I encourage you to read on it. You mentioned in it's in a different folder, you have to type that file path on background-image: url(FILE PATH HERE)

By trial and error I found the answer - press Esc!

Also its seems that I must have originally have cause it to appear by right clicking on the Elements pane and selecting Inspect DOM Properties.

In my case, this was the only solution on Mac OS X:

1. Quit Chrome then delete /Applications/Google Chrome.app.
2. Delete these folders: ~/Library/Application Support/Google/Chrome ~/Library/Caches/Google/Chrome/Default
3. Re-install Google Chrome