I am working on my portfolio and i wanted to ask some questions. In the section where i show my work do i put thumbnails that lead to the actual site when clicked or do i have images instead?
How about both! Its really up to you, I think a lot of clients/employers like to see live completed sites though, so keep that in mind.
Generally, a portfolio is a collection of works. In the case of web design and development, it follows that it is a collection of the sites you've worked on, designed even technologies you've experimented with and their results. Preferable the ones with the best results. One benefit of an online portfolio compared to a traditional hard copy is the ease and accessibility for potential clients and/or employers to view your good work. With that in mind, if you build features which facilitate this it can help in their assessment. Therefore, I think Kewl has answered your question well, and I would agree to include links to the actual website (If it is still online). Or if the company you had built the site for has folded, and you have the rights/license to do so, you may consider self hosting the design within your domain. But include an explanation why. Making relevant sections easier to get to is a big plus and saves time for your potential audience.