I've seen a few users do it in their own stories, but can't seem to find a way to do it myself. Not for the cover art but mid chapter I've seen pictures just pasted on. Sorry if this isn't allowed here.
It is described in the CHYOA Guide - Chapter Formatting and CHYOA Guide - How to add the picture to a thread. Most ways of inserting pictures with Markdown syntax should also work if the Setting "Use the rich text editor to create and edit chapters" is activated, though it is more reliable if the rich text editor is deactivated.
