Below are links that will help you to interface sd card with DE2 kit and read an image from sd card to display on VGA.
1) Start with VGA signal synthesis: http://www.fpga4fun.com/ponggame.html
2) Then move to SD card interfacing: http://opencores.org/project,sdcard_mass_storage_controller
3) Then add a CPU system: NIOS
4) Then add FAT file system: http://elm-chan.org/fsw/ff/00index_e.html
What Image format must it be in. If you can choose one, choose the simplest, (BMP or PPM), then if you don't have to have a FAT system, don't, just write the data raw to the SD card at a specific offset so you can READ it raw from the SD.
Then store it in a faster memory, (internal if you can), so that you can loop the output and not have video underrun's when displaying the image.
Once you have the simplest form running, you can start looking into more advanced features, like dealing with FAT tables, and different image formats, etc.
You might have a look at Altera DE2 demo design :
it will save you some time.