When I just tried to upload a picture, it wouldn't actually upload it when I had it as a .bmp. When I changed it to a .jpeg, it immediately uploaded it. Try changing it to a .jpeg?
Open the picture into Paint.
Click "File", "Save As".
Underneath where you type the name of the picture, choose .jpeg from the drop down menu. Or you can just add .jpeg after the picture name. So if your picture is named "Dog", you could just type "Dog.jpeg" into the box where you type the name. It will automatically convert the file type.
Does that help at all?
Also, keep in mind that the total size of your signature must be shorter (in height) than 240 pixels and smaller (in width) than 640 pixels. This includes the picture and text.
You can also skip all of this and add the picture into Photobucket. When you upload the picture, if you make it a Size Medium, it will be 240x320 pixels. That would be the maximum height allowed for signatures, so you would have to add your text to the picture, OR you could make it a Size Small, which is 160x120 pixels. Then you would have a little room to add text below or above the picture.