Thanks for your patience!
To provide more context, these Item Bank warnings appear under the following conditions when either adding rich content to an item bank (1) or when editing rich content in an item bank (2):
- The user authors an item with rich content (1) or the user edits an Item belonging to an item bank with rich content (2)
- That rich content contains links or URLs to Course-level resources
- The user adds the Item to a Bank (1) or saves changes to the item (2)
To answer your first question on "what happens to an image in the stem when you copy that content to a another course…", assuming that this image is a course file, copying a course doesn't automatically change the links in an item bank so when you add a question from an item bank in the new course, the links would still refer back to the original course. The link to that file does not get updated because in NQ we don't consider item banks as belonging to a course, so there would be no way for it to update to the current course.
In Classic Quizzes, question banks could either belong to a course or account - that's why they had been using course links in their course banks. In NQ, item banks do not belong to courses, a change that was made to make sharing and management of item banks more efficient. For example, you could search for item banks in your sandbox or in a course. When a course copy occurs in new quizzes, Item Banks and their associated questions are not copied to the new course. Instead, the bank is shared with the new course.
If someone wants to put an image in item bank content (as part of a question), they are either loading it from their user files or from their course files. If they are loading the image from their own user files, as long as they set a user file as readable, then the links will work in item banks when they copy a course. The warning appears only if it is course linked content, so if they remove it as a course file and move to a user file then the warning should not come up.
To answer your second question "Why do some images use Canvas links and others use S3? ", S3 is for anything uploaded via old RCE, while Canvas links are uploaded via new RCE. In Canvas if you insert an image it does not use an s3 url.