v0.7.4.0 supports unrotated KML GroundOverlays. If the image is not within a subfolder from the KML location, you'll need to run the KML mode. If the image is within a subfolder from the KML location, the raster processing mode is sufficient.
The most recent beta supports rotated KML GroundOverlays. KML Processing Mode no longer exists. Raster Processing Mode will grab the image if the KML is included.
Neither will support anything using GeoTiePoints which prevents GeoTiff referencing and certain KML referencing.