You don't state if you're using the install-able executable release of the Twine 2 application or one of the web-browser based releases, but based on the fact you mention the "install folder" I will assume you are using the install-able executable release.
the following instruction is how to add images
Those instructions are for the Twine 1 application, which is a different product.
putting images in the Twine install folder allows you to reference them with image markup, like [img[img.jpg]]
That particular markup generates a HTML img element like the follow.
... which is using a Relative URL to reference your image, and a file reference via a Relative URL needs to be stored relate to the HTML file referencing it. Unfortunately the HTML document (not a file) create by the Test & Play options of the install-able executable release of the application only exists in memory, so there is no HTML file for the image to be relative to.
You must use the Publish to File option to create a Story HTML file and then save/move that HTML file to a location that is relative to your image, then you will be able to view the image when you open the HTML file within your web-browser.
This same issue effects other media types like video and audio.