I have made very good pesto bread by doing the following:
I set my bread machine on manual mode, and make a white dough
(just use your favorite bread recipe that you thing will
taste good with pesto).
When the dough is ready, I take it out of the machine, and spread
it flat -- so that it is the width of a bread pan, and as long as you
feel comfortable stretching it. Then I spread pesto over the whole thing,
roll it up, and put it in a greased bread pan (conventional, not machine!).
I let it rise until doubled in size, and then bake in the oven.
(For my 1 1/2 pound white bread, I preheat the oven to 450, then bake
for 10 minutes, and then turn it down to 350 for about 1/2 hour.)
The bread will loosen in the pan when it is ready.
This makes a nice loaf with a spiral of pesto in it. It doesn't toast
well, because the pesto can burn. It's more work then just
throwing the stuff in the machine, but it's well worth havin g
the pesto in a spiral instead of a uniform flavor in the bread.