I was having trouble loading the image, but have since fixed that. Now I cant seem to get the image to actually show on the screen. Instead its just the blue rectangle I have drawn with no texture on it.

#include "SDL.h"
#include "SDL_image.h"
#include "SDL_opengl.h"
#include <math.h>
#include <stdio.h>

int loadImage();
void drawImage();

extern SDL_Event event;

GLuint texture = NULL;
GLenum texture_format=NULL;
GLint nofcolors;

bool initGL()
{
    //Initialize Projection Matrix
    glMatrixMode( GL_PROJECTION );
    glLoadIdentity();

    //Initialize Modelview Matrix
    glOrtho(0, 1200, 700, 0, -1, 1);
	glMatrixMode( GL_MODELVIEW );
    glLoadIdentity();

    //Initialize clear color
   glClearColor(1.0,.4,0.0,0.0);
   glEnable( GL_TEXTURE_2D);
    //Check for error
    GLenum error = glGetError();
    if( error != GL_NO_ERROR )
    {
        printf( "Error initializing OpenGL! %s\n", gluErrorString( error ) );
        return false;
    }

    return true;
}

bool init()
{
    //Initialize SDL
    if( SDL_Init( SDL_INIT_EVERYTHING ) < 0 )
    {
        return false;
    }

	SDL_GL_SetAttribute(SDL_GL_DOUBLEBUFFER,1);

    //Create Window
    if( SDL_SetVideoMode( SCREEN_WIDTH, SCREEN_HEIGHT, SCREEN_BPP, SDL_OPENGL ) == NULL )
    {
        return false;
    }

    //Enable unicode
    SDL_EnableUNICODE( SDL_TRUE );

	


    //Initialize OpenGL
    if( initGL() == false )
    {
        return false;
    }

    //Set caption
    SDL_WM_SetCaption( "Project Birth Game Window. Guns&Player.", NULL );

    return true;
}




int main( int argc, char *argv[] )
{
    //Quit flag
    bool quit = false;

    //Initialize
    if( init() == false )
    {
        return 1;
    }

    //The frame rate regulator
    Timer fps;
	fps.start();
	loadImage(); 


	int x = 0, y = 0;
	//Wait for user exit
	while( quit == false )
	{
        //Start the frame timer
        
		
        //While there are events to handle
		while( SDL_PollEvent( &event ) )
		{
			if( event.type == SDL_QUIT )
			{
                quit = true;
            }
			
			else if( event.type == SDL_KEYDOWN )
            {
                //Handle keypress with current mouse position
                
				SDL_GetMouseState( &x, &y );
                
			}
		}

	
		drawImage(); 

       
        update(); 
		
		SDL_GL_SwapBuffers();
		
        //Cap the frame rate
        if( fps.get_ticks() < 1000 / FRAMES_PER_SECOND )
        {
            SDL_Delay( ( 1000 / FRAMES_PER_SECOND ) - fps.get_ticks() );
        }
	}

	//Clean up
	clean_up();

	return 0;
}




int loadImage()
{


	SDL_Surface* surface;
	
	
	if((surface = IMG_Load("Avatar Basic Character Model.jpg")))
	{
	
		

	//get number of channels in the SDL surface
	nofcolors = surface -> format -> BytesPerPixel;
	
   //contains an alpha channel
	if(nofcolors == 4)
	{
		if ( surface -> format -> Rmask == 0x000000ff)
			texture_format = GL_RGBA;
		else
			texture_format = GL_BGRA;
	}
	else if ( nofcolors == 3) //no alpha channel
	{
		if(surface ->format->Rmask==0x000000ff)
			texture_format=GL_RGB;
		else
			texture_format=GL_BGR;
	}

	//Have Opengl generate a texture object handle for us
	glGenTextures(1, &texture);

	//Bind the texture object
	glBindTexture( GL_TEXTURE_2D, texture);

	//Set the texture's stretching properties
	glTexParameteri( GL_TEXTURE_2D, GL_TEXTURE_MIN_FILTER, GL_LINEAR);
	glTexParameteri( GL_TEXTURE_2D, GL_TEXTURE_MAG_FILTER, GL_LINEAR);
	glPixelStorei(GL_UNPACK_ALIGNMENT,1);

	
	glTexImage2D( GL_TEXTURE_2D, 0, nofcolors, surface -> w, surface ->h, 0, texture_format, GL_UNSIGNED_BYTE, surface -> pixels );
	
	}
	else //could not load image
		return -1;


if (surface)
{
	SDL_FreeSurface(surface);
}

return 1; 

}


void drawImage()
{

	//Clear the screen before drawing 
	glClear( GL_COLOR_BUFFER_BIT);

	//Bind the texture to which subsequent calls refer to
	glBindTexture( GL_TEXTURE_2D, texture);

	glPushMatrix();
	glTranslatef(300,300,0.0f);
	glBegin(GL_QUADS);
	//Set color
	glColor4f(0.0,0.0,1.0,0.0);

	
	glTexCoord2i(1,1);
	glVertex2f(150.0,0);//bottom right
	
	glTexCoord2i(0,1);
	glVertex2f(150.0,-50);//top right
	
	glTexCoord2i(0,0);
	glVertex2f(0.0,-50);//top left
	
	glTexCoord2i(1,0);
	glVertex2f(0.0,0);//bottom left
    

	glEnd();
	
	glPopMatrix();

	
}



	
	
		

For these kind of issues you should really use a debugger.

It has been a while since I used openGL but I preferred gDEBugger (http://www.gremedy.com/ ) to find out what was going wrong.

It will show you all OpenGL calls and what the current state of the rendering context is (for example is culling active ? what is the viewport size ? what textures are bind ? etc etc).