To embed an image into the body of an email, you must first upload that file to your webserver (via FTP for example) so that a URL is generated for the photo. Then, when sending an email, click the Image icon and insert the image's URL into the appropriate field. You can also set other elements for the image such as width, height, border, vertical and horizontal space, and alignment. Clicking the OK button will insert it into your email. The same process applies to embedding images into your contracts (Settings > Contracts), email templates (Settings > Emails > Email Templates) and packages (Settings > Pricing > Packages).
To learn how to add attachments to emails, check out this article.