There are two ways to embed photos into a Word file... Insert Picture From File, and a simple copy and paste; both are explained below.
Insert Picture From File
1. Click your cursor at the point in your file where you want the photo inserted:
2. Choose Insert |Picture | From File, from Menu at the top of your screen.
A small window, titled Insert Picture pops up. It displays photos from your default picture directory. Unless you have changed your default, it is My Documents\My Pictures.
4. Click your cursor on the picture you want to insert.
5. Your picture is inserted at the point you clicked in your file in step one.
This method automatically places your picture "in line with text".
Copy and Paste a photo into MS Word
Sometimes its easier to copy and paste a picture into MS Word, but if you do that, you must be sure that its "wrapping" method is "In line with text".
If the picture is not placed "in line with text", it may move around on the page.
Find the photo's filename in your directory, and right-click on the name.
Choose Copy from the dialog box that pops up
Go to the page where you want the image placed, click your cursor at exact place you want the picture placed, and chose Paste.
Right-Click on the image and choose Format, then Inline with Text.