There are a few threads asking about this, but I'm yet to find an answer. I'm having the same problem. Here the code:
<?xml version="1.0" encoding="UTF-8" standalone="no"?>
<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.1 //EN" "http://www.w3.org/TR/xhtml11/DTD/xhtml11.dtd">
<html xmlns="http://www.w3.org/1999/xhtml">
<head>
<title>cover.html</title>
<link href="template.css" rel="stylesheet" type="text/css"/>
</head>
<body>
<div id="cover.html" xml:lang="en-GB">
<div class="Basic-Text-Frame">
<p class="images"><img class="image" width="100%" src="images/cover.jpg" alt="cover.jpg"/></p>
</div>
</div>
</body>
</html>
My image is 523wx800h, 150px.