Have you implemented a File Uploader question to allow users to upload the image? In that case, you should still be able to use the process I described. :)
You can do this by using a function called GetUploadedDocumentBinaryString. This function returns the Base64 string of any file that has been uploaded with a File Uploader. If you save this string to a variable, you can then call that variable in an Image field in your Word document.
If you're not familiar with this function, you can find out more information in this topic: http://documentation.knowledgekube.co.uk/manual/#_Master%20Content/FileUploader/GetUploadedDocumentBinaryString.htm
If you refer to the "Uploading and Using Images in Dynamic Documents" topic I linked to in my previous post you will see that you can set one of the parameters called ImageOptions to 3, to indicate that you want to render an image from a Base64 string - then enter the keyword of the variable that contains the string in the ImageData parameter.
I hope that's been of some help. :)