You have to put a "hosted" picture in your signature box. Looks like a reply box, not use the upload signature option. It it is turned off because it doesn't work with the ways we have the forum setup.
Use your photobucket or whatever image hosting service you like, upload you pic to there. Then chose "generate tags(some say codes)" there. Use the one that has the pic location wrapped with [img]your pic[/img]. Copy the code and paste it into your signature reply box. Make sure you chose Save before you close it.