This might be a bug ‌. I've just tested and I get the old red cross error where my picture should be.

Inspecting the source of the email the URL of the image is a site relative path rather than an absolute path, therefore the URL cannot resolve.

Not sure if this is by design or oversight. Obviously in the list that is correct because you are viewing the image in context of the current site, but if you are viewing it in an email, that path needs to be absolute.

Can anyone offer insight as to whether this is a bug, limitation or by design?

With regards to your issue here, images in Rich Text fields are stored in https://tenantname/sites/sitename/SiteAssets/Lists/YourList/NewForm/imagename.jpg

So you might be better building this URL in the workflow or email code if you want to overcome this issue straight away.

Thanks Ryan for your valuable time  .. if i understood you correctly are you suggesting to re format the url before adding it to email body ?

Something along those lines. The reference Nintex picks up is clearly intended for use within the site, not outside of it so you'll need to make this an absolute URL for it to work outside of the SharePoint site.

Thanks for the reply. but I not getting image file url instead I am getting something else as below

<img src="" style="margin:5px">

Are you still referencing the image from the rich text field?

I don't believe this will work. I think you'll need to incorporate your image into your email body via HTML, not through a reference to a rich text column.