I keep waiting for someone who's really knowledgeable to answer your question, and I guess they're all on vacation. I can only extrapolate from my own experience in using the program. Except I've never had to deal with a sub-folder before. If my book contains images, they're all in the same folder with the HTML document.
So, can you eliminate the sub-folder, and put everything in one folder? If you can, after you import the HTML and a new folder is created, you're going to have to manually copy all the images and paste them into the new folder that's just been created, before you proceed.
If you want to add a cover image, you should do that before you proceed, too, unless you plan on having Calibre do it instead.
Faced with your problem, I'd at least try the above, always assuming that you haven't done that already.
Jim
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