We generally attach an image file with an email to send to somebody. But we can also keep an inline image within our message. It will be displayed along with the message rather than allowing to download. Inserting a inline image makes your email more beautiful and you can convey more information to your receiver. To do this you have to check whether two things are enabled in your Gmail or not.

To know rich formatting is enabled or not just press on compose button. If rich formatting is enabled then you will see the following tools just above your editing text box as shown in the following figure. If the rich formatting is not enabled then click on the link rich formatting just above the editor text box.

To know Insert Images is enabled or not, go to compose email message and verify whether there is a icon to insert images in the tool bar or not. The same has been shown in the following figure.


If the inserting images is not enabled then go through the following steps to make it enable.

How to enable Inserting Images

• To enable the Inserting Images option click on the gear icon present at the top right portion of your Gmail.  
• Then go to Settings –> Labs tab. 
• And then make sure that Inserting Images radio button is enabled. If it is not enabled, make it enabled and click Save changes.
• Now again go to compose message and you will find the Insert Images icon in the tool bar.

(You may also take interest to know How to forward emails from one address to other automatically)