If the picture you want to use is on your computer, you first need to sign up to a website like
Photobucket (it's quick and easy). That lets you upload any images you have. Then you copy the link to the image that is given to you and you paste that in to your signature in the Control Panel menu.
If you're using one you found on the internet, just take the link straight from where ever you found it
Then just add image tags to the link so it displays the picture not the link itself. e.g. mine looks like this:
CODE
[img]http://img.photobucket.com/albums/v155/T-nemesis/5b2bbfb7.jpg[/img]