Just a little addition to Need's code. Add an "alt" tag to the image. A lot of email clients nowadays block images in emails unless you OK them. This will mean that a red cross could be shown in place of the image. An alt tag will ensure that if the image isn't shown, that some reasonably descriptive text will be.
Code:
<a href="http://www.somewhere.com"><img src="http://www.somewhere.com/images/image.gif" alt="Banner for Somewhere" /></a>
Also - upload your picture to somewhere on the internet (
PhotoBucket for example) and place that link into the img tag. Just linking to the file on your PC is not going to work when you send that email out.