Usually you'll need to have your images stored on your own web server.
Let's say you have an images folder located on your server at http://www.yourserver.com/images and an image called buynow.gif located in that folder (located there because you used FTP to upload it to your server).
Then in your html message, you'd use an img tag to point to that image, like this:
With the new Outlook 2007, MS has taken html email BACKWARDS by at least 5 years !! You might want to check out http://www.campaignmonitor.com - there's lots of good articles, how-to's, etc, and if you choose to use their service, it's pretty reasonable.
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Web Goddess & Web Standards Evangelist :) - Tables Be Gone !!