How do you add an image?
Just to clarify the problem here - the error is in the following bit of code:
<xsl:attribute name="src"> <xsl:copy-of select="/root/Image/node()"/></xsl:attribute>
The instruction xsl:copy-of takes a node or node-set and makes a copy of it - outputting a node or node-set. However an attribute cannot contain a node, only a textual value, so xsl:value-of would be a possible solution (as this returns the textual value of a node or nodeset).
A MUCH shorter solution (and perhaps more elegant) would be the following:
<img width="100" height="100" src="{/root/Image/node()}" class="CalloutRightPhoto"/>
The use of the {} in the attribute is called an Attribute Value Template, and can contain any XPATH expression.
Note, the same XPath can be used here as you have used in the xsl_copy-of as it knows to take the textual value when used in a Attribute Value Template.