insert image in mail body
To create an HTML email you can do something like this:
...
$message = "<html><head></head><body>";
$message .= "<img src='link-image.jpg' alt='' /></body></html>";
$headers = "From: $from_email";
$headers .= "Content-type: text/html";
mail($to, $subject, $message, $headers);
This should build an HTML email for you and you should then be able to insert just normal html.
edit You can read more about how to create HTML emails using PHP from here: http://css-tricks.com/sending-nice-html-email-with-php/
If you are actually asking: How to attach and insert inline images in a html email? you can use this for guidance :) https://www.quora.com/What-is-meant-by-inline-images-in-HTML
In that example, pay extra attention to how the src attribute of the img tag is filled (the "cid" is actually the id given as "Content-ID:" for the image attachment header).
Hope this helps, all the best...