The below refers to the 1st version you posted. In the future, please attach the original *.iqx file, not a Word document.
#1: An <item> element is *not* a stimulus. This won't work:
<item Essay_items>
/1 = "Essay01.jpg"
/2 = "Essay02.jpg"
/3 = "Essay03.jpg"
</item>
<trial Essay1>
/stimulustimes = [1=Essay_items]
/ pretrialpause = 500
/ timeout = 40000
/validresponse = (" ")
</trial>
You need to reference the <picture> (!) element in the <trial>'s /stimulusframes:
<trial Essay1>
/stimulustimes = [1=Essay]
/ pretrialpause = 500
/ timeout = 40000
/validresponse = (" ")
</trial>
<picture Essay>
/items = Essay_items
/select = sequence (1,2,3)
/position = (50,50)</picture>
#2: You also ought get rid of the stray ')' in
<block Essay>
/trials = [1=Essay1; 2=Essay2; 3=Essay3; 4=Essaysurvey; 5=EndEssay
)]
</block>