You can use a Section or Description Area field to insert an image into a Formstack form. First, you would add either a Description Area field or Section. Then click on the "add image" icon in the toolbar for that field.
From here you can upload an image by clicking on the dotted lined square as shown below or dragging and dropping the file in the dotted lined square. Another option is "By URL" which can be done by clicking on the hyperlink icon. This would allow you to insert a URL that links to the image. Also, if you want to use an image that you uploaded to another form you could click on the "Browse" (folder icon) option which will list all other pictures you have in sections and description areas throughout all the forms on your account.
You should now see that your image has been uploaded.