The other solution is attaching the image as attachment and then referencing it html code using cid.
HTML Code:
<html>
<head>
</head>
<body>
<img width=100 height=100 id="1" src="cid:Logo.jpg">
</body>
</html>
C# Code:
EmailMessage email = new EmailMessage(service);
email.Subject = "Email with Image";
email.Body = new MessageBody(BodyType.HTML, html);
email.ToRecipients.Add("[email protected]");
string file = @"C:\Users\acv\Pictures\Logo.jpg";
email.Attachments.AddFileAttachment("Logo.jpg", file);
email.Attachments[0].IsInline = true;
email.Attachments[0].ContentId = "Logo.jpg";
email.SendAndSaveCopy();