I have been working on a Homebrew item for sometime now and I wanted to make sure that everything was kosher so I read Homebrew Rules and Guidelines.  One part caught my attention: "You may not create content with the following: Images from Wizards of the Coast publications. This includes photographs, scans, PDFs etc."  This was interesting to me because according to Wizard's Fan Content Policy, "You can use Wizards’ IP (except for the restrictions listed in #3) to make Fan Content that you share with the community for free."  

My questions are:

1. Is the use of Wizard's approved content not allowed because we have to sign up to use D&D Beyond?  
2. If I cite all of my sources, can I still use an image approved by Wizards? 
3. What sources are we allowed to pull from?  Just the Basic Rules?  Unearthed Arcana?  Anything else?

Sorry for the questions, I just like to cover my bases before I proceed with certain plans.

Wizard's approved content is not allowed because is a violation of the copyright. Citing the sources does not get around that fact.

Technically, you are allowed to use only original work, or the someone else's work with permission.

Thanks for the response, but I am still confused.  Wizard's page clearly says that fan made content is allowed to use their content as long as it is free (with minor exceptions).  So how is it a violation of the copyright if they have given their permission?

Scrolling down that page, it says that Fan Content must be original work, not a copy/paste version of Wizards' IP.

Anyway, you are using DDB service for homebrews, and this service forbids any form of copyright violation.