Hello there, @townsendb1 ...
I just tried this as well in my own sandbox course, and I was also unable to upload a *.jpg file to a file upload question type in a Canvas quiz via the Preview of the quiz. This is just a hunch on my part, but I wonder if the reason we cannot upload a file is because we are in a "preview" mode. However, if you view the quiz in "Student View", pretend like you are going to take the quiz in "Student View", and you should be able to test out the file upload question...at least, that's how it worked for me.
I hope this will be of some help to you. Sing out if you have any other questions...thanks! Take care...be well.
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