Or upload it to a picture hosting site and use the IMG code they provide. Right click the picture, select copy image location, upload from URL on a site like tinypic is a really good one, or imageshack, then once you finish there should be a forum IMG code available to copy and you just copy that code into your sig.
upload the pic to naruto base... or anywhere... and copy the image url ... go to user CP at the top of the page.... edit sig .... then you'll see a yellow box with a gray mountain... click it and paste the url there... then save