Thanks time thief and others for your help. I found the material below at: http://en.support.wordpress.com/advertising/ and it seems to clarify the affiliate advertising policy.
"WordPress.com does not permit the use of affiliate links in blog widgets. We define affiliate links as:
Links to external services and vendors that include a unique identifier within the link destination to tie the link to your account...
I also looked at what WordPress considers blog widgets and the general text area is not included.
Here is the URL and text: http://en.support.wordpress.com/widgets/
"Widget is a fancy word for tools or content that you can add, arrange, and remove from the sidebar(s) of your blog."
Note, it says these are related to the sidebar and not the blog text space.
Hence, I am still confused over the policy, but these two entries seem to support what I would like to do - include specific ad images for one affiliate in the text entries in my blog.