When using the template logo it is impossible to upload a bigger logo that does not overlap. This method allows you to add a larger logo that does not overlap and looks half decent.
 
1) Turn the header off in the template settings
2) create a new line in the template and split it into 4+8
3) assign the left hand one to position 4 (if it is free, otherwise use another one) and the right hand one to position menu
4) create a module, upload the logo image, link it to the home page and assign it to position 4 on all pages

It will give you more control, I have never got on with the included header very well

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