Are the images supposed to work?  Because they never have for me.

I can absolutely nail the stated requirements regarding format and sizing, but...nada.

I've never seen one function on anyone else's Homebrew either.

Monsters, Magic Items, etc...doesn't seem to matter.

Images will be displayed on unpublished (aka private) homebrew. Once you publish it, the image will be removed (for obvious reasons)

Not from my personal experience.
It doesn't matter whether it's published or not, my creations never seem to have images.

Here is a private homebrew item I made that has an image. You need to make sure you're following the uploaded image size guidance, otherwise it should work