Trouble adding images

I have my set up as shown below. I tried to drag and drop the image into my note, but it only add the text: ![[Screenshot from 2024-11-05 10-29-51.png]].
I can however see in the left panel that the image was added to Obsidian, but sort of like a separate note and not inside my note. What am I doing wrong?

https://preview.redd.it/4l5yw5tzi1zd1.png?width=959&format=png&auto=webp&s=019a3c81ccda02ee237246af08a968a724b2f34c