I'm sorry - I did not notice your comment come in. Normally we try to respond more promptly.
We don't support inserting images into a PDF document.
You should be able to highlight, but you need to first select text. If you double tap a word, you should see the selection shading appear with two handles so you can expand the selection to include more words, or sentences, or paragraphs. Once text is selected, you will see the annotation menu appear so you can select highlight.