You can add the img tag to the answer text and enclose it in CDATA if it is not already so (see example below). I don't know how you do the conversion from Word. I store the questions in Excel and use formulas to create the required Moodle
xml strings for the questions.
<answer fraction='33.3333333333333'><text><![CDATA[<img ... /> ]] </text><feedback><text></text></feedback></answer>