Public Open groups cannot have file storage enabled.
Upload image file with the file dialog or by dragging and dropping images onto the dashed region
https://www.zotero.org/support/groups#library_settings
thank you
Then go to the Group Settings:
https://s3.amazonaws.com/zotero.org/images/forums/u265723/c5ew0s3h1ry70wi5rvja.png
Then Library Settings:
https://s3.amazonaws.com/zotero.org/images/forums/u265723/wb29f9ou47ije5u4hjcp.png
And it is at the bottom:
https://s3.amazonaws.com/zotero.org/images/forums/u265723/upc08zxd3ib837xytsbq.png
It may vary depending on the Group Type, as mentioned in the documentation linked above: