Yes, Kelvyn is correct.
I've researched this "bug" when trying to figure out another problem, and I found that the editor does not like the background value in the BODY element.
This is because the editor is fully XHTML compliant, and the bg tag is not part of the xhtml specification/standard.
So.. I'm not sure what to do to "fix" this, because it's not really a bug. But at the same time... I don't really want to force you to change your HTML (although it is always a good idea to use xhtml standards).
I might eventually add some kind of "allow xhtml incompatibility" switch or something to the admin area. Do you think that would be sufficient? It would allow your old (invalid) code to remain.. but it would still not show up properly in the editor itself while editing. (Preview would display it properly, etc.. the editor would not "fix" your code to make it xhtml compliant, etc..)
Let me know what you think.
In the meantime, the solution is to specify a body element in your CSS file, and then specify the background image in there. That will work with all browsers, and also with the snippetmaster editor.