I may have found a solution that fixed it for me. According to the original installation the mod_catslwi is point to a category, which has 3 articles. Now what I did is created another category with 3 new articles with pictures. Then I went back to the mod_catslwi settings page, I pointed to the new category that I have created and the pictures appear.
Now the difference is that my new 3 articles, I only have an image and few words with no read more function. According to others when you add the read more function the image disappears. I can’t confirm this yet. I have to do more digging to see.
hope this helps others with similar issues.