Change your taggle method as follows to have a single select image list.
$scope.toggle = function (item) {
$scope.selectedImage = item.imageUrl;
};
And change the view as
<li ng-repeat="item in items" ng-click="toggle(item)" ng-class="{'selected':item.imageUrl == selectedImage}">
<img src="{{item.imageUrl}}" style="height:36px; width:40px;"/>
</li>
So only one image can be selected at the same time.
For using an icon instead of border you can set the icon as background image. the following link are usefull