Is this docker or custom installation on a web server?
What’s the CMS library path set to in CMS Settings?
If you’d navigate to the Report Fault page and look at the environment checks, do you see any issues there?
If you’d navigate to the Modules page, find Image module, I assume the .jpg is there as a valid extension?
If it is custom instillation please, double check the php settings - How do I upload files bigger than 2MB / How can I increase the upload file size limit?