Currently, the image uploading stopped working because Telegraph X app is based on Telegra.ph API that is supported by the Telegram team.
Yesterday, Pavel Durov announced disabling new media uploads for this platform:

✂️ We’ve also disabled new media uploads to Telegraph, our standalone blogging tool, which seems to have been misused by anonymous actors.

Since the Telegraph X closely depends on Telegra.ph API the image uploading will be removed from the app as well soon.

Alternatively, you can still paste image links to your telegraph posts.