My team and fellow coworkers were also experiencing these issues in Geneva. Copying from word only seems to have limited support and depends on the picture embed from my experience. I found several work arounds and created a knowledge article for my company to assist all knowledge creators. I'll copy and paste it below. Hopefully this helps! It definitely is very clunky and hopefully in the near future it will get some much needed attention!
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Three methods are outlined below to insert an image into a knowledge base article.
Method 1 - Copy/Paste
Advantages of using this method are that it is very quick are easy to accomplish. However it can cause broken images if it is linked to another file location (see warning and note below).
Step 1. Right click the image you want to copy (or CTRL-C).
Step 2. Right click -> paste (or CTRL-V) inside the Text field of the article.
Note. Using the Snipping Tool and copying it from the snipping tool or copying it into a word document and then copying it to the article may ensure it is not linked to another location.
Warning: Check to ensure the image is not linked to another location. If the image is unknowingly deleted from that location your image is then broken. This can be checked by clicking the image and then clicking "Insert/Edit Image".
If the image displays something similar to the following with the image field showing a link to an alternate location then it is incorrect (it is linked to SharePoint in this example). It can be fixed by using Method 2/3 or by copying using the snipping tool or into word as the Note above suggested.
The below image is correct (since it is a pasted image attachment).
Method 2 - Insert via Attachment
Advantages to this method include a clear tie between the image and the article by linking the two.
Step 1: Save the image to upload to a file location you can access.
Step 2: Click the "Insert/Edit Image" button.
Step 3: Change the Type to attachment.
Step 4: Select "Choose File" to upload a file. Browse and select the image to upload.
Step 4: Click "Attach" after you've selected the image. And then click "OK" to finalize the image insert.
Method 3 - Insert via Image Library
Advantages to this method include no public attachments displayed and allowing you to access the same image from multiple articles/locations.
Note: You can also browse, add and manage the images in the image library by searching for "Images" in the left pane Filter navigator tool or by going to System UI > Images. You must have the image admin or knowledge manager role to manage/view this table. Only delete images out of this table that you added yourself as a safeguard not to break other's images.
Step 1: Save the image to upload to a file location you can access.
Step 2: Click the "Insert/Edit Image" button.
There are two possible ways of adding images to the Image Library from here.
Way 1
Step 3: Click "New".
Step 4: Choose your file to upload.
Step 5: Click the upload button and then click "OK" to finalize the insert.
Way 2
Step 3: Click the magnifying glass to open up the image library table.
Step 4: Click "New" to add a new image.
Step 5: Type the name of the image that will be used with the image extension.
Step 6: Click the "Click to add..." text. Then choose the image to upload and click "OK"
Step 7: After this step it may give you an error and if so, go back into the image library table, and search with the name of the image you just entered in and select it.
