Just wanted to throw this out there for people.
Normally SWE doesn't let you insert an image that is not a .bmp (which is completely dumb) so i have been saving images as png or jpeg and then converting them to bmp in windows paint.
It will let you "attach" any type of image, but then if the image moves from the location you get an error displaying the image.
Well almost as a joke i just renamed the extension of a png to bmp in windows explorer and tried to insert it.
Well lo and behold it worked.
Im using windows10 and SWE19.4
So basically it means that all the program is looking for is the extension of the file to be bmp. (I can't believe that windows would do the conversion for me when I renamed the file)
TLDR;
Just rename your png and jpeg images to bmp and insert away.
There's a little more to it than the software just looking for a bitmap file extension, but you're right that Windows is not actually performing a conversion when you change file name, and PNG and BMP are fundamentally different image types\formats.
What may be happening in Windows 10 is that when the extension is *.bmp, Solidworks Electrical tries to insert it using a Windows call, and at that time, Windows provides the uncompressed raster format that SWE is looking for, simliar to using the clipboard.
Either way this is a great tip, and not something that I recall working in Windows 7 - perhaps someone still on 7 could confirm?