The problem with images not appearing is most likely because the blorb conversion strips the images out.
In order to get them back you need to run the blorbtool.py script, which extracts the images and generates the interpreter/resourcemap.js file.
The steps are explained in several different comments here. (Background here.)
Edit: although having said that, it appears that isn’t sufficient in this case. Trying it out on my own unreleased story that uses graphics it still doesn’t show any of them. (This appears to be that, as far as I can tell, there’s no way to set the image_info_map with the Parchment template.)
Also, the page title shows up as undefined.