I used a Vbulletin system years ago for a PbP that I ran, and I enjoyed posting pictures of the NPC next to the dialogue. I'm not seeing an option for that here. Is it possible?

/help/content.cgi?t=faqs&page=rubbcode

Check out the "Images" section.

<img src="http://beta.rpol.net/images/banner-light-beta.gif">

that's the example. When I preview it - I just see the code, not the picture. What am I doing wrong?

Nothing. Some threads won’t let you post pictures or hyperlinks.  I’m guessing this is one of them.

If you were to display the above picture in a thread of a game you are in it would work just fine.