Click the plus button from the bindings panel and choose "Form data" and then browse to your form page. That will add the form to the bindings so you can add it to the email body more easily.
It is supposed to automatically update relative paths to full paths in your email body. It might be doing something wrong. If you give me FTP access and steps to reproduce then I can debug the image and css issue. It should work and I don't see any obvious issues in your code.