How do I sign my signature using Mail?

I tested this by creating a signature with a small photo, which I just dragged into that column. When I went to compose an email, the signature with both the text and photo appeared before I even typed anything. It had text plus a small jpg image. The file was .jpg (not .jpeg) and is was about 35KB in size (small).

When you drag the image into that right hand side box, there should be a little green plus symbol as it gets added and then it appears right away. Does that happen for you?

You can drag a signature that is saved as a graphics file (e.g. jpg) into the box for signatures under Mail - Preferences - Signatures. See below instructions, look in the Mail Help section labeled "Right column."