Dear Paul,
Thanks. I have made a new XPM image and gzipped it , renamed it as splash.xpm.gz and put it in /boot/grub folder. Now I am getting a grub error. The system is rebooting repeatedly while loading grub. I tried to do this again by entering rescue mode. It gave grub:error-14 during the grub screen and hanged.
Is the splash image the only thing you changed?
The GRUB Splashimage HOWTO at http://ruslug.rutgers.edu/~mcgrof/grub-images/ says that you may need to re-run grub-install if you change the splash image with some older versions of grub if you have remapped hard drives with a device.map file.
Paul.