I solved this by uploading my images into my "My Files" area - i.e., the area in Canvas linked to me, not to a particular course. I was then able to save the New Quiz with no warning message.

I agree that the "flagged" response failed to answer this, especially since the solution was rather straightforward. And it's not clear why Canvas would even allow one to add an image to an "Item Bank" question, that wouldn't also be available to other courses that might use the same Bank.