It depends on where you put your image and how you deployed your web application and what server do you use. If you simply used NetBeans to create the .war file or just run your application then the image is not beeing read from where you think it is. In the above case your image is deployed inside the war and you must read from there.
I have tried your example and had the same problem. Then I moved the image inside a folder in the structure of the server and it worked. In my case I had the .war in :
.......\domains\testDomain\autodeploy\web_app.war and I moved the images at:
.......\domains\testDomain\autodeploy\images
And at the code I used: src="/images/image.jpg"
The first thing you can do is try to read the images from the .war file or from whatever you have deployed. Or:
You need to open the directory where your server is running and place the images in a folder where your application is. From your images it looks to me that you are using NetBeans. If you go to the Services tab, (next to the tabs where you see the structure of the project - the image you posted) click the Servers icon and follow the tree. Right click on the server you are running and find its location. There you will find your application and place there your folder with the images.