Here is the process to change the login window background screen to show a custom image and for that image to not show up as blurred. The 2 processes mentioned previous are both used for this.
1 - Place you custom image in the /Library/Desktop Pictures/ folder
2 - Rename Sierra.jpg to SierraBKUP.jpg
3 - Rename your custom image to Sierra.jpg and restart. You now have a custom, but blurred login window screen.
4 - Go to /Library/Caches/ and open in Preview the com.apple.desktop.admin.png file.
5 - In Preview go to Tools -> Show Inspector. Take note of the Image size (pixels).
6 - In Preview open your original custom image. Go to Tools -> Adjust Size.
7 - Change the Width & Height (pixels) to match the Image Size from Step 5. Export the file in PNG format with the name com.apple.desktop.admin into the /Library/Caches and restart.
Viola!!