Use a PNG with transparency for the picture
Add the PNG to OBS as an Image source
If you want the picture itself blurred, blur it in an editor first and save as PNG
If you want the background behind the picture blurred, duplicate the source
Put the duplicate underneath the original image
Apply a blur filter to the duplicate source
Keep the top source unblurred
Lower the opacity of the blurred layer if needed
Use a masking image if you want blur only in a specific shape
Add the mask as an Image source or use a plugin that supports masks
Use a browser source with CSS blur if the image is web-based
Use a filter/plugin such as StreamFX if you need stronger blur options
Make sure the source order in the Sources list is correct
Use Alt-drag crop if you need to fit the image cleanly
Use the Transform options to resize and position the image
Save the scene after setting the blur and transparency correctly