1) You need to make the image...
2) Then simply size it, 80 pixels wide x 40 pixels high, and go into your profile and click on the upload signiture pic link.
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Creating the image is much more difficult to explain... You'll need some sort of image editing software, I think the common low priced tools out there are photosuite and photoshop le. (Not sure of the current freebies or sharewares out now-a-days, been a while since I used anything BUT photoshop!)
Depending on which program you choose, you will be able to modify an existing picture (if you grab one) or create a new one. You can add text, other pictures, colors, etc in creating you image. Most of the tools are relatively easy to use, the only difficult part is the way some of them handle saving and actually getting it to look the way you want! (Sometimes ideas are easy to think up, but a pain to make real!)
Depending on your skill level with these tools, you can do some pretty amazing things.
-- GB