You can attach images to the email to send as an attachment to the recipient but you will have to specify the correct mime type for the image in your php code (see the tute at the link I posted).
If you want to use an image in your html design for the email then you need to specify the absolute path to the image in the src for the <img /> starting from http://blahblah as you did.
If you are following PHPMailer then you have two ways to send images:
$mail->AddEmbeddedImage() // to embed the images in the email body with some token defined in the raw mail body.
$mail->AddAttachment() // to attach the image