When creating or editing an email template, when you select the content area there are additional controls for formatting available.
Selecting the Picture icon will open the image properties section.
Add or paste the link to the image as required. It must be a url link for an image that has been already uploaded to a website or image hosting site in order to enter the link. Currently, images cannot be uploaded straight from a PC or device for the email content. You can also delete the filler text, that is there simply to show you how the image would look and what size it will be in comparison to the email text.
You can then adjust the width / height to what your preferred image size should be within the email. If you change one, the aspect ratio should adjust the other as well, to prevent the image from warping.
If you would like to add a link to the image, then you can click on the Link tab and simply add the url that you would like the image to send someone to, as well as where in someone's browser that the link should open to.
And the Advanced tab has more options still for those who wish to utilise those for the image.
Click Ok once you're happy with the image and settings, and it will now display in the email template.