Top Picture: Guitar is too close to you
2nd Picture is the proper way to hold the guitar.
As far as strumming goes remember that it is not just arm movement. The primary movement is your wrist and thumb. There is some arm movement involved but it is not the primary focus.
When sitting, as you are in the image the only thing that should move is your thumb and a slight bit of wrist movement. Your arm on the guitar should stay planted where it is. I don't even strum straight down the strings. Practice picking one string at a time all the way down and back up without moving your arm from the resting position. Then pick one string at a time back up.
After you get comfortable with that I want you to double-pick each string. This will be a down-up pattern.
string - Down Up
E - D U
A - D U
D - D U
G - D U
B - D U
E - D U
E - D U
B - D U
G - DU
D - D U
A - D U
E - D U
Practice that to help prepare you for double-picking. Try multiplying the D U by two for each string then up to 4 for each string.
The next part of the exercise is to lightly rest the back of the palm near the bridge of the guitar to give a muted sound to the notes.
Now as the speed you are picking increases, you may hear a ring out from nearby strings. On your left hand use your thumb to mute the 6th string and your fingers to mute the strings beneath.
This all may seem like it's not teaching you anything, but later on, as you progress in your playing you will want these little habits. These habits will help you to play clearly and concisely. Learning these little tricks will make you a better guitar player.