Your screenshot shows that the size of the iso is ~860 MB. It is only half of the iso! That's why live USB creator could not recognize the iso.
I think your download was interrupted. If you use torrent, you can download the remaining iso without starting over. Also, it is usually a good idea to verify the checksum of the downloaded images so that you will know that the image is good. Hope this helps. Cheers.
P.S. Nice background image, by the way