You have to have the image hosted somewhere. For example I host my pics at www.photobucket.com It's free. Once you have it hosted somewhere you right click the URL of the pic and hit copy. Then you come over here to where your making a new post. Hit the Img tag above. Then right click your mouse next to the Img that just came up. Then hit paste. The URL of your pic should appear. Then hit the Img button again. Hit submit and once the post appears the pic should be on it. Kinda like this:
I know what you are doing wrong. Upload the picture to a place like photobucket.com or webshots.com, and then when the picture is on the website, right click on the picture. Then click properties. Then you should see an URL there. highlight that, and copy it. then do what rick said.
When you put it on photbucket you have a few options under each picture to choose the URL from. The first one is URL. RIght click on that and it should highlight it. Then go down to COPY during your right click and hit it. Then come over here and in yoru post hit the Img tag. Right click next to it and hit paste. Then hit the Img tag again and hit submit.