An idea would be to cut the image from the template, and then add it to a template with a spine.
*Tip: If you would have worked with layers, that would not happen. But it should be easy to fix anyway. The design is great BTW*.
EDIT: If you really want to use the same template, cut the logo, resize the rest of the image and put the logo back on. The image will fit without getting over the spine, and the logo will not be blurred out.