Google had enabled adding image to the gmail signature. This was a much awaited feature. But it doesnt allow you to directly upload any picture. Instead you will have to upload your picture/image to some online photo album or file hosting that allow hot-linking. Then you will have to provide the URL to that image in Google signature. Since Google provides Picasa web album we can use it to upload your image.
This post will take you through step by step instructions to achieve this.
First you need to upload the image/picture that you want to include in your email signature to Picasa.
You can go to Picasa Album by wither going to http://picasaweb.google.com or clicking the Photo Menu at the top left corner in Gmail window as shown below.
No you will be taken to the Picasa website. Here you will find an Upload button at the top as shown below. Click that button
Then window pops up and ask you to either select an album or to create a new album to add the image to. If you do not have an album created please do so first. You will have to give an Album name and create a new album in this case.
Now it will present you with a list of text-boxes and buttons to upload the images. Click the browse button and select the image/picture that you want to upload and click ok. Once you have choosen the image(s) that you want to upload, press the Start Upload button.
Now you will see the image(s) that had been uploaded. You have to get the image URL to put in your signature. For this Right Click the mouse over the image. In the menu that comes up you will see Copy Image URL or Copy Image Location or something similar depending on the web browser that you use. Click it and the image URL will be copied to your clipboard.
There are multiple ways to get the image URL. I recommend the one I explained above.
Now go to Gmail and click settings at the top right corner. In settings (General Tab) you can find the signature editor. Click the Add Image icon. This pops up a form to add the image URL. Right Click the text box and click paste. This will paste the image URL that you copied in the previous step. If the URL can be accessed the picture will be shown below the text box and the OK button becomes enabled. Click Ok and the picture is added to your signature editor box. Now you can move the picture around as you want.