You need to remote link the picture. Use a website that allows remote linking. I've heard several people mention imagestation. Then in your user cp it gives youan option of putting stuff in the sig. use [ img ] before the location of the picture and [ /img ] after. However, leave out the spaces between the [ and the text. (I put it there to avoid the symbols disappearing.) Make sure it is the location you get by right clicking on the picture at the remote site and looking in the properties.
The computer questions answered thread (check Anne's super duper important threads) has more info on how to do it.
That said, I still can't get mine to work. LOL