My name is Daniel Q. Green and I am wasting my time today (2 AM) by typing a life pro top on beautification: pictures that represent books. Why? I'm sleepy.
1. What is a story picture?
1A. Simply put, a story picture is a COMPANION to the STORY. Not the other way around. It is supposed to draw in the reader's attention by giving them a "feel" for your story.
2. What should a story picture be?
2A. As mentioned before, it is supposed to represent the story. This can mean DIFFERENT THINGS in DIFFERENT MINDS. For example, you could have a picture of a momentous story event as the picture, or perhaps the setting if it plays a major part (which it SHOULD).
3. What should a story picture NOT be?
3A. I'll just say this right here: your OC. WE KNOW HE IS THE MAIN GODDAMN CHARACTER. DO NOT STRESS IT FURTHER. Ugh.
A story picture shouldn't be something unrelated, a character, a non-pony image (sort of "unrelated"), and NOT a watermarked/stocked image. Ew, unprofessionalism.
4. Where do people get their images?
4A. If there is one, underneath the cover image of a story should be a Source button. Click it and check your URL. If it redirects you to the same page - the author drew it. Anywhere else should hopefully be the artist's page - NOT a booru or image hosting site. If it is indeed one of those, use Google SBI to find the original.
5. Should I even have a cover?
5A. Yes! It has been proven by FiMfiction's stats that stories with covers get more hits than ones without - and that shows it's doing the job.
6. That's not true.
6A. That's not a question.

To recap:
YES, have a story image, and make it be a STORY COMPANION. Do not have the story be a PICTURE CAPTION. *coughOClifestorycough*
I would say something like "draw your own pictures", but I can't draw, so I'll leave that up to you.

Concerning 3A, what if the story is a crossover and the non-pony image is from the franchise I'm crossing over?
For example, say I wrote a story where Dogbert from the Dilbert comics ends up in Equestria and tries to take over, would it still be unwise to use an image of Dogbert?

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It would be best to show the crossober itself rather than half the crossover. For example, Dogbert and a pony.

Lol Dogbert...

Anyway, good guide. I'm thinking of drawing my own cover image but do you think quality makes a difference for a picture? I mean, if I do make one, I'll make sure it looks nice, but it won't be some amazing fight scene with godlike shading and perfect perspectives. Just a simple picture.

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It should simply let the reader know what they're reading. It should take some effort, but not more than the story.

If you are writing an all OC fix you sort of have to make your own cover art depicting your own OC.

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But your OC should be involved in the story in the picture. Is your story going to be about how your OC looks? No? Then why is he/she the main focus of the story picture?

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I have an all OC fic, and as it so happens the characters appearence is a crucial element of the story, also the pic I drew depicts a scene that happens later on in the story. However, I do see what you are saying.