In the Html pictures are always <img> tags with a Url, you cannot put image data directly in the Html document.
This rule applies with Html mail.
The way images are embedded in Html email is to add the image as a MIME part to the email and then in the img tag set the src attribute to the Content-Id of the MIME part. There is a special Url syntax for this.
e.g. if this is the MIME header for the image part:
—-=_NextPart_001_000D_01C79667.1A2EEFB0
Content-Type: image/gif
Content-Transfer-Encoding: base64
Content-Location: http://localhost/images/logo.gif
Content-ID: 1C7AE6B1-6728-4a5e-8D64-02F27B91B666
Then in your Html mail your add an <img> node:
<img src=”cid:1C7AE6B1-6728-4a5e-8D64-02F27B91B666″ />