I have made simple tool to convert CSV file containing latitude and logitude to KML file. Adding the image using the relative path is can be done easily for each location using following code:
pnt.style.balloonstyle.text = "<![CDATA[ <table width=100% cellpadding=0 cellspacing=0> <tr><td><img height = " + str(height_of_image_latlong) + "px width=" + str(width_of_image_latlong) + "px src='" + str(image_relative_folder) + "/" + str(row) + ".JPG" + "' /></td></tr></table>]]>"]
There is any way to save image permanently to the KML file not in the relative path,so that next time KML file will not loaded from file relative path but from own file system.