Once i drag the image to 'Drop an Asset Here', section and apply. The image does not load.
Is there any additional steps i need to take to enable this feature? Or is there anything i am missing?
The dialog will try and use the 319x319 thumbnail rendition within the Dialog.
If you're not seeing it, then I'm assuming you don't have that thumbnail.
Check the DAM Update Asset workflow model and ensure that you're creating thumbnails for that asset type
Check the Mime type of image against the mime property of the image component.
can you clarify, the image is for the article not the thumnail.