edit: It seems you got three answers for the price of one. lol
1. A brief explanation of why your existing code is not working.
a. Both Naked Variables and the <<print>> related macros output the current value of the variable, and the $youImage variable currently equals a String value of "img\you\smallyou.jpg". While that String values is meant to represent both the path to the image file's location as well as the name of the image file itself, it isn't actually a real HTML img element (or Image object) so the engine doesn't know to display it as anything other than plan text.
b. Due to historical reasons a forward slash "/" is used as the path separator to indicate a folder/director in a URL, this is true even on Microsoft based operating systems. So for your String value to correctly represent a path & file name it would need to be changed to "img/you/smallyou.jpg"
c. The back(ward) slash character "\" has special meaning within a String value, it is used to escape special characters. This is why the text output of your variable looks like "imgyousmallyou.jpg" (without slashes), and why if you want to a back slash to appear in text output then you need to double that slash like so "img\\you\\smallyou.jpg"
2. Converting a valid Relative URL String path & file name into an HTML img element using Images markup.
Add markup like the following to your Story Caption special passage and the image should now appear.
note: You should initialise the $youImage variable with a default (valid String path & file name) value within your StoryInit special passage so that the StoryCaption passage as something to show when the story first starts, this could be a blank image if you don't want show an image at the start.