Did you create the signature using a Thunderbird 'Write' window? Did you then save it as a HTML file ? Did you attach the signature html file in Account Settings - see image?

RE: the section below the signature 'this email and it's attachments..." is that text part of the signature html file ?

Is there an image included in the signature?

created signature as a document then attached

I suggest you open the config editor, add this value as a bool (if it isn't already there):

mail.compose.attach_http_images

and set it to true.