Can I use HTML in my item description, like if I want to add a picture or a link?

Yes you absolutely can!  In doing so, you will want to be sure that the image (if you are using an image) is uploaded to your Yahoo! Store, or to a public location such as Flickr or Google Photos.  You can then use  the HTML to reference the location of the image.

Please keep in mind that you will want to be cautious as to how much HTML you use for this as using to much may negatively impact your website.