The image has to be uploaded to the server as well.
Images are often stored in a directory called "images" in your main directory. If it's not already there, you'll need to create the directory, upload the image to it, then make sure the code in your page points to it.
The image code looks something like:
<img src="images/yourimage.jpg" width="150" height="200" alt="yourimage">
Hope that helps some
k