make sure the picture is in the same folder as the JCloze file. In the JCloze quiz, make sure that the picture is specified using only the name of the picture file, e.g. mypicture.jpg. If the picture is specified using a long name that includes folders, such as "C://My Documents/images/mypicture.jpg" then it will not work when you upload it to Moodle.
Once you have check that the picture is specified in JCloze using just the picture file name, then generated the JCloze web file, the html file, and view it in your browser. Check that you can see the picture.
Now login to Moodle and go to your course and add a new HotPot activity. Click on the "Add" button for the "Source file" and upload the JCloze "jcl" file (not the html file), and the picture file too.
Now save changes and confirm that you can see the the HotPot quiz and it displays the image correctly.