Diane, the way I do it is upload my image to photobucket. Then open note pad and add the html code from photobucket. The second line is the one you want that says HTML code. Save your note pad document at sig.html but be sure to save it to a place on your computer where it can stay. Like maybe your "My Documents". Once that is saved open outlook express and go to tools>options>signature then down to file and browse. Browse for your sig.html file. Once finished it should looks something like this.
Also make sure on this same page to check "Add signature to all outgoing mail".
Be sure to press "Apply" once your done.
HTH's
