If you edit the steps in an active sequence, the changes will only apply to newly enrolled contacts. To apply any changes to contacts who are currently enrolled in the sequence, you can edit the scheduled emails individually, or re-enroll the contact at a later step.
Could you please send us a screenshot of how are you adding the images In the sequence? I was able to test in my account adding the image as my screenshot bellow, and it was showing in the actual email without being attached :
Could you please confirm if this is how you are adding images to the sequence?