Does it not show up when you compose the email or when you receive the email? I just ran a quick test and inserted an image from my media library into an email and it showed up in the editor as well as in the email I sent to my Gmail account. I did have to tell Gmail to display the image as it was not shown by default.
If you’re not seeing it at all while composing the email I would suspect you have a jQuery problem from something. Email Users makes use of the standard WordPress WYSIWYG editor, there isn’t anything special about the plugin as compared to the standard post creation process with respect to media and other editing functions.
Have you tried disabling other plugins to see if another plugin is causing a jQuery conflict of some sort?
