I see where the issue is. In this video (https://youtu.be/BUUCATSKNK0) where he is referring to UploadedImage1.image, you would use the Image1.Image. In this first screen shot is my Image Data Card. You can see the 2 controls, AddPicture1 and Image1.

In this second image, you can see the Add Picture control in my form and underneath is just an image control referencing that data card.

So in your submit button you would do the email part first and then submit the form. Otherwise it will clear the image and the email part won't work.
To embed the image in your email:
Set(varImage, JSON(Image1.Image, IncludeBinaryData));
Office365Outlook.SendEmailV2("email address", "Subject", "<img src=" & varImage & ">");
SubmitForm(FormX)
To send as attachment:
Office365Outlook.SendEmailV2("email address", "Subject", "{attachments: (Name: AddPicture1.FileName, ContentBytes: AddPicture1.Media, '@Odata.type':""}));
SubmitForm(FormX)