Georeference Image
GeoreferenceImage is accessible in the Tools tab and can create and edit world files or .gcp (ground control point) files for images. The .gcp files are compatible with ArcGIS image link files, but use a .gcp extension (ArcGIS defaults to .txt extension instead of .gcp, but these are compatible). GeoreferenceImage will allow you to view total root mean squared error (green arrow below) given the number of Ground Control Points.
When you run Georeference Image it will initially prompt you for an image to open. The example shown below uses the image railyard.jpg which has a corresponding GCP file railyard.gcp. Georeference. The GCP must be included using the Import tab.
If you have additional ground truth data, you can add additional GCPs to enhance the accuracy of the image projection.
When initialized with a world or GCP file, you can use Georeference Image to determine the x-y coordinates of any point on the image. By zooming in on the image (as shown below) it is possible to get accurate coordinates of individual pixels.