Blocks run on the app's main thread, so until an entire block stack completes (e.g., when imgWelcome_BT.Click) nothing UI related takes effect. This is important because the BluetoothClient1.Connect block is synchronous, so your code will pause at that point until the block either returns true or false. No UI updates will happen until later, so setting the Picture to bluetooth-connecting.png is overridden by setting it to bluetooth-enabled.png within the function.
To achieve what you want you want, you'd have to have something like a Clock with an interval of 1. Set it to enabled when the button is clicked, and in the Timer function (currently your ConnectBluetooth logic), disable the clock again and then run your logic. If the Connect block takes 5 seconds at the point it should be fine because the UI would have updated when the Click event was exited but before the clock's timer fires.