I think it's done the same way you paste an image into a post using the img code.
So between the first img bracket and the last you need to have the http address of the image you want to use.
For example, here is a sig from another forum I frequent:
All I would do is click on the "Img" button in the vB Code section, paste the link from my webspace location for that sig, and wha-la...
The easiest way would to be paste the image into a post first, then just cut and paste the whole thing, code and all, into the sig section of your profile in the CP.
Hope this helps.
EDIT: It's not letting me show the images in my post for some reason... perhaps because I'm not registered to this board?
It's says img code is off for me. Oh well. That's the procedure anyway. Good luck.
EDIT #2: In the User CP I added the sig which you should see now.
I don't use graphic sigs here as a rule, so I'll delete it as soon as you give me confirmation.