I'm a System Admin so this shoudl not be a permission issue. We're running the lastest update to CRM.
This is what appears after saving:
When clicking on the image placeholder and selecting properties, the location URL references the Knowledge Article Entity.
I found this thread that was having a similar issue, but there was no solution provided other than running the current version.
https://community.dynamics.com/forums/thread/details/?threadid=f97c2d7d-fff0-4132-bca1-cc5e28310bd4
I also saw this question, but the proposed solution to "Enable users to use Inline Image feature to Yes" is not available.
https://community.dynamics.com/ask-question/?forumid=0bcc5ca1-34a8-4c24-8124-00cd7c3127a1