Hi - Unfortunately there are TWO IDENTICAL looking mountain/tree icons on the design editor toolbar and you happen to be clicking the wrong one. Click the one just below that - it's just to the left of the words "user links". This will bring up a list of your saved images in Auctiva for inserting into your description. Here is a post that describes the process:
https://community.auctiva.com/eve/forums/a/tpc/f/8386099...481012912#9481012912For more info on the 16 pics, do a search on the forum with keywords: "16 pictures" and a list of other posts on the subject will display. Just click the FIND tab for the search box.
Regarding your question about the choices at the bottom of the section: Choose Auctiva image hosting if you are using pics saved in Auctiva, choose external image hosting for pics saved on another web site.