The red x is a button by Acorn to remove the image from the brush settings, and then to fall back to an auto-generated one. So it’s normal if you’re making a brush from an image.
As for painting in white- I’m assuming you’ve got the current brush color set to something other than white? Acorn 4 had a option to “colorize” brushes, but that’s the default setting now for Acorn 5 and 6.
The approach you’re using seems reasonable. One thing you might try and do is use Acorn 6’s new stamping functionality with the clone tool. So you could make a large brush, pick an area of your image you’d like to clone, and then on a new layer you could hold down the shift key while clicking to temporarily turn the clone tool into a stamp tool.
Both the functionality of cloning from a different layer, and the stamping are new in the Acorn 6 beta, which you can grab from here: http://flyingmeat.com/download/6/
You could also try copying + pasting in your image into a new layer, and erasing sections of the new layer that don’t look right.