The link is pointing to your hard drive.
Have you defined a site in DW? Or did you drag and drop this image from your Desktop?
Copy the image to your local site folder structure then use DW to Insert > Image.
I have defined a site in Dreamweaver. The jpg file I am using for the image
I am trying to insert is in the folder on my local site. I deleted the
photo and tried again to set everything up again. It still doesn't work for
some reason. Am I maybe applying two rules improperly or something?
What you've done sounds OK if your site is defined correctly.
If you're using Insert > Image in DW to insert the image, you should not be getting an operating system file path.
I finally got things resolved. There was something in one of the meta tags I was using that was causing the problem. Once I got rid of the meta tags it all seems to work. Thanks again.