Photos in TimeLine

It's on the road-map.

For now you can try to make a clip from you photo and import that.

Just tried the following in Win7:
Start "Windows Live Movie Maker".
On the tab project, choose 16:9
Import your photos, adjust the time-length of the photo.
Export the movie in High Defenition (1080).
It will be exported as .wmv.
Open Any Video Converter (AVC) (free program)http://www.any-video-converter.com/download-avc-free.php.
Add the video to AVC.
Select "custom MP4 Movie (*.mp4)" as export format.
In Video settings select codec x264 (mpeg4 won't work for VE).
Ajdust the other options if you like.
Export the video and import it in VIRB Edit.
In this way you can also create Titles for your movie.