Do you get the old image or the broken image icon? It can take several hours to show up although in practise it seems to work straight away.
So you have made your file and uploaded it to your site, say http://example.com/smx_logo.png
Then in the webmail log box you have entered http://example.com/smx_logo.png
If that is not working you might be best sending in a support request. You can enter the file manually but then you would have to update a squirremail config file.
Opinions are my own views, not DreamHosts'.
I am NOT a DreamHost employee OK!! :@
You act on my advice at your own risk!