OR, go to the address of your image, ie type it in your address bar, and then right-click the image and click "Copy." Then, going back to your User Control Panel here, go to "Edit Options" and make sure that the option near the bottom of the list entitled "Message Editor Interface" is set to "Enhanced Interface - Full WYSIWYG Editing." Then go back to your signature edit screen and right-click and "Paste." Then save.
Of course, this all depends on Vlad's earlier point; the image MUST be on a server already. It cannot be an image just sitting on your computer (Without complicated setup that I do not know how to do).
www.imagehosting.us is another decent free host that allows hotlinking, no sign-up required. They don't allow adult content, however, so it would only work for G-rated signatures.