Well I found the answer, and its that UE4 is buggy as ■■■■.
For some reason when you click the drop down arrow of the brush after having worked with your project for any period of time, it wont give you the drop down menu, instead it opens up a window and has you select the file / texture manually, then it either gives you the option to save or close. If this happens your boned, and it wont work, it will assume your trying to create a new texture file for some reason, and instead of simply selecting that texture to use for your UMG widget, it will save over the texture file first, and then set it as your image…
I got it to work finally, by closing out of the program, then immediately creating a new widget blueprint, putting the image into the canvas panel, and then clicking the drop down menu, at which pint it FINAL gave me the drop down menu instead of the stupid window that was having me manually select it.