The extension effects (e.g. "darker") work on polygons but not on imbedded images. Is this expected behavior?
I have tried deleting preferences and reinstalling.

Yes this doesn't work for images.
Images have their own extensions in extensions/bitmap images (I guess this is the name of the menu ; I use a FR version).
What comes closer to darker for images would be extensions/bitmap images/adjust hsv => try lowering the v value.

or you can edit your image in external editor

or you can add a filter onto your image (use a colormatrix with the following value
0.9 0 ...
0 0.9 0 ...
0 0 0.9 ...
0 0 0 1 0

... = pad with 0
) decrease 0.9 to get darker value

Thanks for your reply