Hi Pankaj,
Thank you for your interest in Essential DocIO.
I tried testing this issue as you stated here. I am afraid. I am unable to reproduce the issue. I have modified Mailing Label sample with an image field of EmployeeReport sample. I was not able to reproduce the issue.
Here is a sample for your reference.
MergewithImages.zip
Please take a look into the sample and let me know if you have any queries.
Could you please provide me your sample so as to reproduce the issue? This will help me investigating further on this issue.
Regards,
Dhivya.