Am I able to create a form where the person completing the form is able to insert and image and then draw on the image?

I want to set up a form so that a person submitting the form can add an image and then draw on the image.

Yes, that's possible using this widget http://widgets.jotform.com/widget/draw_on_image

Demo: http://form.jotformpro.com/form/52071860014950?

Hope this helps!