When I try and preview a 'web page' containing an image for an html message, the image does not appear.

You need to reference the images absolutely, rather than relatively. For example your message has the HTML image at
<img src="/mw/CDA/Media/Images/Gen/tagline.gif" border="0">,
you need to reference it absolutely, such as
< img src="http://www.meriwest.com/mw/CDA/Media/Images/Gen/tagline.gif">
That will tell the browser where to look for those images.

How are images hosted in the emails sent out? Do I need to upload images to your server?

No, you do not need to upload your images to our servers. The images in a HTML e-mail are hosted on your web site. For the HTML to read correctly, they need to be listed as absolute references (i.e. http://www.uptilt.com/picture.gif). The servers will search for the referenced picture in the location you have saved it. If you enter the picture as "picture.gif", the servers do not know where to find the image to display it.