The system allows photos only up to the following size:
Limits: File size = 100 KB, Dimensions = 500x500, Quota = 206.4 KB/500 KB
Browse to your photo, upload, then click Add to insert into the edit box.
If you want to have space around it (offset from text) go to the Appearance tab, select Vertical and/or Horizontal spacing and play with the amount (try starting with 10).