Hi dru_,
Welcome to the forum, as far as I know you can work with and manipulate other images besides bmp. You can copy and paste most any image to your wordpad, I just copied and pasted some gifs and jpgs and resized , positioned them. The 'insert' function is probally just for bmp's.
Try using a graphics program like irfanview, pull up- open- the image you want, then copy it, (edit/copy or right click and copy) go to wordpad and paste it. You should see it. Double click it and you should get the control dots around it to resize, position etc.
Whatever your reason for using Wordpad, the above should work. But Windows has other programs too, try using Frontpage Express, usually loads with windows , same as Imaging. Or Netscape has Composer.
Lots of freebies out there to do whatever you wish.