Use a RichTextBox control instead. Check this out
http://msdn.microsoft.com/en-us/library/ee681613%28v=vs.95%29.aspx#inline_images_or_other_elements[
^]
ok so I just noticed the first link I added was for silverlight? I was tired sorry.
So I thought I would add some example code
BitmapImage bitmap = new BitmapImage(new Uri(@"testImg.png", UriKind.RelativeOrAbsolute));
Image image = new Image();
image.Source = bitmap;
image.Width = 32;
image.Height = 32;
InlineUIContainer container = new InlineUIContainer(image);
Paragraph paragraph = new Paragraph(container);
paragraph.Inlines.Add("This is a image and some text!");
richTextBox1.Document.Blocks.Add(paragraph);