How do I translate my template to another language?

Directly in the template code. (Dashboard → Design → Edit HTML or Dashboard → Template → Edit HTML in the new Blogger design), with a really simple process:

1. Using the browser search, find the text you want translate.
2. Replaces that text with your translation.
3. Repeat the process for all the words / phrases that you want to change.

The text within an image need to be changed with a image editor (eg. Gimp or Photoshop) and then, replace that image url with the edited image url.