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You can either go to an image hosting place, get it hosted, get the path, then enclose it in in your signature. There's other ways but i haven't figured them out yet.
Click on "User CP" then click on "Edit Signature", scroll all the way down to the bottom of the page and you will see 2 options for adding your picture. If you have your picture on your computer select "Browse" then navigate to the folder containing your picture. You will probably have to shrink your image down since there is a 100kb image size limit. Well I just google'd "How to shrink a picture" and I found a flippin' web site that shrinks your images for free on their web site! Imagine that!! Here's the link: Resize Images online
Hey, i figured it out. Go to signature page in User CP, go to the bottom and upload a signature picture, then click the "Insert signature picture" link. It will put the image in your signature. The code is . You might have to position it in your signature on your own, as it inserts it in an arbitrary location.
If you need to shrink, just right click the picture, go to edit. It will open in Paint. Hit ctrl+w (resize) and enter 50 and 50 in the height and width. it will shrink it down by 50%. hit save, check size. If it's not enough, try it again, this time at 75 and 75. It's best to create a copy of your origional before doing this.