When you upload an image, you do it to a page. The page can be a profile page or a free space page. You can then attach the image to other pages if you wish.
As long as the image is attached to at least one page, it remains on WikiTree and can be linked from within the body of the narrative. If you remove all pages attached to the image, then the image will be deleted. That would be why it no longer is displayed in the body where you linked it.
I share your feeling about wanting to place images at the position in the narrative where they are relevant and I don't like to see them marching down the right side in no logical order. My solution is to create a space page that I use only to store images. I do *NOT* attach other pages to any of the images, but I do link them from the body of whichever profile(s) are appropriate.