I think I can help later tonight if you can't get it done......can you get it loaded into the visitor's gallery? Below are the set of directions that I follow and it works.
Enter your Picture to upload (jpg gif 100Kb Max.)

Below I think are the right directions:
You have your picture uploaded...

1. Click to view your large image.
2. Above the picture is the address bar. Highlight the bar and click on edit... hit copy and close the window.
3. Go to dialogue box (post reply) and type whatever....
4. Go below the main text box, by the graemlins, and click on the image tab to the right....in the text box that
comes up, RIGHT click hit paste and OK.
Do Not hit the image tab a second time!
5. Preview the post..your picture should be there.