The code, as supplied (_after_ I'd added
the relevant imports and fixed a long line)
opens an unresizeable frame of almost
no size in the upper right..

SSCCE
S(ish) - I suppose
SC - passed.
C - had to add imports - warning.
E -  did not display stated behaviour - failed.

Try again, this time, put the imports in,
make sure all lines are < 80 char, and
the example _shows_ the behaviour..

--
Andrew Thompson
* http://www.PhySci.org/ PhySci software suite
* http://www.1point1C.org/ 1.1C - Superluminal!
* http://www.AThompson.info/andrew/ personal site

here is the relevant answer..

(and stop using a "Drag'n'Drop" UI
designer, they make tortuous code!)
_______________________________________
import java.awt.*;
import java.awt.event.*;
import javax.swing.*;
import java.io.*;

public class DiabloBackupRestore
   extends JFrame {

 private Container container;
 private ImageIcon backgroundImage;
 private JPanel backgroundpanel;
 private JButton backupButton, restoreButton, browseButton;
 private JDialog dialog;
 private JLabel savepathLabel, characterLabel, backuppathLabel;
 private JTextField savepathField, backuppathField;
 private JList characterList;
 private JLabel label1,label2, label3;
 private JTextField textfield1, textfield2;
 private JList list1;
 private JButton button1, button2, button3, button4;
 private JFileChooser fileChooser;
 private File saveFolder, backupFolder;

 public DiabloBackupRestore() {
   super("Diablo Backup & Restore");
   container = getContentPane();
   container.setLayout(new BoxLayout(container, BoxLayout.X_AXIS));
   container.add(Box.createHorizontalGlue());
   ButtonHandler handler = new ButtonHandler();
   backupButton = new JButton("Backup");
   backupButton.setToolTipText(
 "Copy character file(s) to another location");
   backupButton.addActionListener(handler);
   container.add(backupButton);
   container.add(Box.createHorizontalGlue());
   restoreButton = new JButton("Restore");
   restoreButton.setToolTipText(
       "Copy character file(s) to Diablo II save folder");
   restoreButton.addActionListener(handler);
   container.add(restoreButton);
   container.add(Box.createHorizontalGlue());
   setResizable(false);
   ((JPanel) container).setOpaque(false);
   ImageIcon background = new ImageIcon("background.jpg");
   JLabel label = new JLabel(background);
   getLayeredPane().add(label, new Integer(Integer.MIN_VALUE));
   int width = background.getIconWidth();
   int height = background.getIconHeight();
   label.setBounds(0, 0, width, height);
   dialog = new JDialog(this, false);
   fileChooser = new JFileChooser();
   setSize(width, height);

   pack();
   validate();

   setVisible(true);
 }

 private class ButtonHandler
     implements ActionListener {

   public void actionPerformed(ActionEvent e) {
     if (e.getSource() == backupButton) {
       showBackupDialog();
     }
     else if (e.getSource() == restoreButton) {
       showRestoreDialog();
     }
   }
 }

 private class DialogButtonHandler
     implements ActionListener {

   public void actionPerformed(ActionEvent e)
   {
     if (e.getSource() == button1)
     {
       selectSavedGamePath();
     }
     else if (e.getSource() == button2)
     {
       selectBackupPath();
     }
   }
 }

 private void showBackupDialog() {

   Container container;

   label1 = new JLabel("Saved games path", SwingConstants.RIGHT);
   label2 = new JLabel("Backup path", SwingConstants.RIGHT);
   label3 = new JLabel("Character", SwingConstants.RIGHT);
   textfield1 = new JTextField(10);
   textfield2 = new JTextField(10);
   list1 = new JList();
   list1.setVisibleRowCount(3);
   list1.setSelectionMode(
 ListSelectionModel.MULTIPLE_INTERVAL_SELECTION);
   //  button1 and button2 activate a JFileChooser
   button1 = new JButton("Browse...");
   DialogButtonHandler dialogButtonHandler = new DialogButtonHandler();
   button1.addActionListener(dialogButtonHandler);
   button2 = new JButton("Browse...");
   button2.addActionListener(dialogButtonHandler);
   button3 = new JButton("Ok");
   button4 = new JButton("Cancel");
   button3.setPreferredSize(button4.getPreferredSize());
   DialogButtonHandler handler = new DialogButtonHandler();
   container = dialog.getContentPane();
   container.removeAll();
   container.setLayout( new GridBagLayout());
   GridBagConstraints c = new GridBagConstraints();
   c.insets = new Insets(4, 4, 4, 4);
   c.weightx = 1.0;
   c.weighty = 1.0;
   c.gridx = 0;
   c.gridy = 0;
   c.gridwidth = 2;
   c.gridheight = 1;
   c.fill = GridBagConstraints.HORIZONTAL;
   container.add(label1, c);
   c.gridx = 2;
   container.add(textfield1, c);
   c.gridx = 4;
   c.gridwidth = 1;
   c.fill = GridBagConstraints.NONE;
   c.anchor = GridBagConstraints.WEST;
   container.add(button1, c);
   c.gridx = 0;
   c.gridy = 1;
   c.gridwidth = 2;
   c.fill = GridBagConstraints.HORIZONTAL;
   c.anchor = GridBagConstraints.CENTER;
   container.add(label2, c);
   c.gridx = 2;
   container.add(textfield2, c);
   c.gridx = 4;
   c.gridwidth = 1;
   c.fill = GridBagConstraints.NONE;
   c.anchor = GridBagConstraints.WEST;
   container.add(button2, c);
   c.gridx = 0;
   c.gridy = 2;
   c.gridwidth = 2;
   c.fill = GridBagConstraints.HORIZONTAL;
   c.anchor = GridBagConstraints.CENTER;
   container.add(label3, c);
   c.gridx = 2;
   container.add(list1, c);
   c.gridx = 3;
   c.gridy = 4;
   c.gridwidth = 1;
   c.fill = GridBagConstraints.NONE;
   c.anchor = GridBagConstraints.EAST;
   container.add(button3, c);
   c.gridx = 4;
   c.anchor = GridBagConstraints.WEST;
   container.add(button4, c);
   dialog.setTitle("Backup Diablo II Character");
   dialog.setDefaultCloseOperation(JDialog.DISPOSE_ON_CLOSE);
   // container.setBackground(Color.RED);
   dialog.setSize(300, 200);
   dialog.show();

 }

 private void showRestoreDialog() {

   Container container;
   container = dialog.getContentPane();
   container.removeAll();
   dialog.setTitle("Restore Diablo II Character");
   dialog.setDefaultCloseOperation(JDialog.DISPOSE_ON_CLOSE);
   dialog.setSize(300, 200);
   dialog.show();
 }

 private void selectSavedGamePath() {
   fileChooser.setDialogTitle("Select saved game(s) folder");
   fileChooser.setFileSelectionMode(JFileChooser.DIRECTORIES_ONLY);
   fileChooser.setCurrentDirectory(new File("C:\\"));
   fileChooser.setSelectedFile(null);
   int result = fileChooser.showOpenDialog(dialog);
   if (result == JFileChooser.APPROVE_OPTION) {
     saveFolder = fileChooser.getSelectedFile();
     textfield1.setText(saveFolder.getAbsolutePath());
   }
 }

 private void selectBackupPath() {
   fileChooser.setDialogTitle("Select backup folder");
   fileChooser.setFileSelectionMode(JFileChooser.DIRECTORIES_ONLY);
   fileChooser.setCurrentDirectory(new File("C:\\"));
   fileChooser.setSelectedFile(null);
   int result = fileChooser.showOpenDialog(dialog);
   if (result == JFileChooser.APPROVE_OPTION)

   {
     // your are storing the information in 'backupFolder'
     backupFolder = fileChooser.getSelectedFile();
     // but using 'saveFolder' ..here
  // textfield2.setText(saveFolder.getAbsolutePath());
     textfield2.setText(backupFolder.getAbsolutePath());

   }

 }

 public static void main(String[] args) {
   try {
     UIManager.setLookAndFeel(
         "com.sun.java.swing.plaf.windows.WindowsLookAndFeel");
   }
   catch (UnsupportedLookAndFeelException ex) {
     System.out.println("Unable to load Windows look and feel " + ex);
   }
   catch (IllegalAccessException ex) {
     System.out.println("Unable to load Windows look and feel " + ex);
   }
   catch (InstantiationException ex) {
     System.out.println("Unable to load Windows look and feel " + ex);
   }
   catch (ClassNotFoundException ex) {
     System.out.println("Unable to load Windows look and feel " + ex);
   }
   DiabloBackupRestore application = new DiabloBackupRestore();
   application.setDefaultCloseOperation(JFrame.EXIT_ON_CLOSE);
 }
}
___________________________________________

--
Andrew Thompson
* http://www.PhySci.org/ PhySci software suite
* http://www.1point1C.org/ 1.1C - Superluminal!
* http://www.AThompson.info/andrew/ personal site