Which image folder to use??

I have modified the "define_main_page" with pictures that I put in /include/languages/english/images. When I previewed the page with PHP Designer, I see these images fine. When I look at it with browser, I obviously don't have them in right image folder, since they do not show on my home page. Which is the correct image folder? If I create additional pages, which image folder should I use?
I tried to move them to the top image folder, but I still don't see them in the browser. When I go to Admin/Tools Define Page Editor, I can see the pictures (if they are in the top image folder), but the screen keeps "looping/reloading".
This is the page that's looping:
http://127.0.0.1/XXXXXXXX/admin/define_pages_editor.php?define_it=4&action=new_page

Images related to your template should be in the template's images directory -

Thank you!

Where can I "modify" the drop down menu in Product Type, "Upload to Directory". I would like to have subdirectories for category (based on number of categories) so I would have the associated pictures organized. Or if subfolder doesn't work, I would like to create additional folders with appropriate names for uploading pictures.

I think I got it....