At Admin -> Members -> Member Ranks you can set ranks according to criteria. If you use member ratings are the criteria, be sure to read the member ratings article.
If you want to have images to represent ranks, upload the rank images to templates/images_default/ranks/. Then use this code at the template location where you want to display the rank image (presumably in the post bit or view profile templates):
<img src="{MEMBERRANKIMAGE}" >
Description
Automatically giving members status according to criteria.
