Img src confusion-can't load png? transparency?

I can only seem to load jpgs with <img src> tag.

If possible I would like to load a png with transparency, is this possible?

Furthermore, I would like to use a <br> right after the img, so all new content begins below the img, but this doesn’t seem to work either.

btw, i am using a scroll bar on this text field, if that has anything to do with it.

Please advise