Hello Pardot Power Users, I need your help!

I'm setting up the new Pardot email builder and am almost at the end, when I ran into an unexpected problem. Where we are so far:

1. CMS workspace and channel is set up.

2. Email Content object is in place

3. Domain is set up as per the instructions I was able to find.

4. The domain was added to the channel, and recognized and added in Pardot Email Setup menu.

The problem:

In the email builder I go to add an image from the cms. I can see the image just fine in the cms window, but when I pull it into the template, I get a broken image icon.

I've been around the moon and back trying to solve this one, so if any Pardot/CMS trailblazers out there might be able to help me out, that'd be incredible!

Thanks in advance