currently, the image needs to be hosted based on what I see in my last post.
from what I understand, some host don't work well with steemit and the images get dropped as a result. I use steemimg.com to host my pics and link them in my post and works quite well. Check my post:
https://steemit.com/steemit/@ace108/how-to-include-image-in-your-post-reference-to-using-steeming-com-in-include-pictures-your-post