Hi,
The [IMAGE1] tag builds all the HTML code for you, so you don't need the <img alt="" border="2" bordercolor="#29318a" src="[IMAGE1]" /> text, just [IMAGE1]. You can also use a URL-type image tag with that HTML code, e.g. <img alt="" border="2" bordercolor="#29318a" src="[IMAGE1_URL]" />
Danno