SethFPSde it's true that we do not allow file uploads, but that limitation is only for FoF Upload (where we have a custom extender for that). We haven't put any limitations to this extension (User Badges).
SethFPSde My question is how do i properly upload url based images into the image url section of a badge without it breaking and are there any pre reqs i need to follow to make sure it gets uploaded (ie. Image size, image type, image resolution, etc.)
By "URL based images", do you mean that the extension allows you to enter an URL to the image, which is hosted elsewhere? I assume that the extension might be embedding images from external URLs directly, instead of uploading them to FreeFlarum and then serving that. I'd suggest looking into the browser console for some clues (e. g.: CORS errors, etc...).
Also, by "breaking", do you mean that the image is not displayed and instead the default browser image placeholder is shown? That further hints at the fact that these images might not be accessible by your browser - try to open the URLs directly in your browser to see if that works, else please check the console for details. If you want, I could also test this extension at my forum with one of your images to see if I can make it work.