Hello,
If you don't need repeater to this image why do uoi use Text/XML transformation for displaying this? Use static text and
<img src="{% IllustrationImageFromMediaLibrary %>" />
if you want to display image from current document. This field should contains relative path to image, eg.
"/EcommerceSite/media/HeadlineBannerImages/apple_ipod_shuffle.jpg?width=700&height=217&ext=.jpg"
If this doesn't help could you provide more information? Which version of Kentico do you use? List here result of your macros (broken path's to image)