you need to first have a picture that is less than 150px in height and 30kb in size
Then when you have uploaded to a photo hosting site, you put the link to the image in BBCode in the User CP > Edit Signature field.
Most of the signatures are made with Photoshop or PaintShopPro, if you check out the sticky at the top of this forum, it will give details on how to make one or have one made