When including images inside the Menu or Toolbar using the radeox { } tag, the tag is intepreted in the context of the Wiki page and not in the context of the Menu or Toolbar.

Therefore you need to use HTML and the XWiki API to actually show images in your menu and toolbar.

First upload the image to any page of your wiki that is readable by all your users. You can put the image in the sidebar page: XWiki.Toolbar

Then use the following HTML and velocity code to show that