After all it turned out to be much simpler than I thought at first.

As said above InLine images do not accept text wrapping as they are seen as text by Word and you cannot just wrap text around other text. Shapes do accept text wrapping so inserting a shape and setting an image as fill material should do the trick. It is possible to insert an image as a shape and apply text wrapping to it like shown below. The extra testing was needed to see if it could be used in our outlook signature creation part of our logon script. I already have something running in production for this (see: this post) but the company branding is being updated so changes are needed. Took some time to figure it out but it works.

Below is some code to demonstrate how it works. I hope it might be useful to others in the future.

As a side note, I used .gif images to prevent Word from resizing the image as it does with .png and .jpg images for example.

 Code:
Break on

$objWord = CreateObject("Word.Application")
? @ERROR
? @SERROR

$objDoc = $objWord.Documents.Add()
? @ERROR
? @SERROR

$objSelection = $objWord.Selection
? @ERROR
? @SERROR

$objWord.Visible = True
? @ERROR
? @SERROR

$objShape = $objDoc.Shapes.AddPicture("C:\folder\image.gif")

;wdWrapSquare = 0
;wdWrapTight = 1
;wdWrapThrough = 2
;wdWrapNone = 3
;wdWrapTopBottom = 4
$objShape.wrapformat.type = 0
? @ERROR
? @SERROR

$objSelection.TypeText("111")
$objSelection.TypeText(Chr(11))
$objSelection.TypeText("222")
$objSelection.TypeText(Chr(11))
$objSelection.TypeText("333")
$objSelection.TypeText(Chr(11))
$objSelection.TypeText("444")
$objSelection.TypeText(Chr(11))

Sleep 10

;Quit word
;$objWord.Quit
_________________________
Mart

- Chuck Norris once sold ebay to ebay on ebay.