When you upload your image, you must make sure it follows the guidelines listed below the "browse" button:
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Note: The maximum size of your custom image is 500 by 200 pixels or 195.3 KB (whichever is smaller).
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Also make sure your file type is supported. I can't remember exactly which image types are supported, but I know .bmp is not. When you try to upload your image, it should tell you why it didn't work if it doesn't upload. Once you have successfully uploaded the image, you have to click the link right next to the image that says, "Insert Signature Picture." This will insert the [SIGPIC][/SIGPIC] tags into the text box and you can add text around the image.
Please remember that the entire signature has a maximum size of 500x200 (approximately 10 lines of size 2 text). If your image is 500x200 by itself, you should not be entering further text around it.