Hi-- this may be a question for Tech Support. The image you use does NOT have to be from SAS/Graph. For example, let's say you have a corporate logo that you want to insert into ODS output. In general, the way images work in ODS is this:
HTML -- ODS builds an IMG tag, so the image location MUST be the location that will be used when the HTML page is rendered
PDF and RTF -- ODS does NOT build an IMG tag for these destinations. The images are converted to an internal format appropriate to the destination. BUT, this means that the location of the image you're using MUST be the place where the image is stored WHEN the PDF or RTF file is created.
I do not remember the destination that was being illustrated in the paper that you referenced, however, by the reference method (filename.filetype), I believe that demo was run on a Windows or Unix system and the image file was in the same directory where the output file was being created. If you were creating the PDF file on the mainframe, then the image has to be available on the mainframe to be loaded when the PDF file is created.
Also, this Tech Support note explains that for PDF, the name you specify must be an absolute reference (not a relative "filename.filetype")
http://support.sas.com/faq/045/FAQ04502.html
There are a couple of issues in general with the creation of PDF files on the mainframe (since PDF is a proprietary file type) and you have to FTP the output back to a platform that has Acrobat Reader or some other software for rendering the PDF output. But at the point where the rendering software is involved, the image has ALREADY been embedded in the PDF file in internal PDF format.
Tech Support can help you with these issues and let you know whether it's still appropriate to use the techniques outlined in that paper. The techniques were very experimental when the paper was written.
cynthia