You would use the INCLUDEPICTURE fieldcode, but you put the full path to the
picture in this field so would not need it in the excel file - so assuming
that all your pictures are in say C:/pictures the INCLUDEFIELD field would
be as follows:
{ INCLUDEPICTURE "C:\\pictures\\{Photos}.jpg" /d }

So Photos is the mergefield, and the /d is optional - this prevents the
graphic from being saved with the document if you want to keep the file size
down.
Graham