Hello
Yes You can insert the pictures in the form and using Conditional formatting hide the Pictures and can be shown only when the appropriate value is selected in the dropdownlist.
Also to display the picture on the computer you need to place the Picture control and show it as a link so that when this value is selected this control is shown and the user can browse the form on the computer using this control
I hope this helps you.
Kalyan G Reddy
Infopath MVP 2007 and 2008