Ok, let's step through this:
User CP / Edit Signature
Now look at the Edit Signature box. Does it have the indicated row of icons, and the photo icon?
If not, go to Edit Options on the left side menu and scroll down to Miscellaneous Options. The Message Editor Interface should look like this:
Then do what I show in this video clip. If none of this works there are deeper issues an admin will have to get involved with.