Tricia, this thread explains everything about attaching pics, smileys etc, both in posts and signatures:
Important Information: posting pictures, attachments and image linking

As for where people find their pics, probably all over the net. Try to make a search on Google for "free clipart", "free graphics" etc. Just make sure it's not copyright protected material* you link to (and that the page allows direct linking if you don't have your own server to put the graphic on.)

(*Say I who have Lara Croft as my avatar... LOL. Oh well, just look upon it as PR for Tomb Raider... )

/gil