I'm trying to figure out how to add images to my squiffy story, but I was only able to find one guide on it, and it wasn't very good at explaining how I need to go about it. So I was hoping maybe someone could help me.

Note the very beginning of the Squiffy documentation:

You can format text using Markdown, and also use HTML.

To add an image, you can either do the following:

![Alternate text here](my-image.jpg)

Or else this:

<img src="my-image.jpg" alt="Alternate text here">

The image in question needs to be in the same directory your story is exported to, otherwise add the correct path. Or else host it somewhere online, and enter the complete address. That should do it.