The FEATURED PRODUCTS block is the one below the Center Editorial block.
This block can be enabled through Modules | Tools | Featured Products on the Homepage v0.9.
The default number of featured products is ten. You can add more if you have a lot of items to feature by changing this amount.
What you want to do now is to add the products (and their images) to this featured block.
The location of the images file would be in the image folder
When you upload the image files on the product page, it will be saved into the particular folder which is not in the theme folder. Therefore, if you change ...