To post pictures in the middle of a post:
Upload a picture somewhere (here, photobucket, etc). After it is uploaded, view the picture and right-click it. Go down to properties and you'll see the URL of the picture. Highlight and copy it, then close the dialog box. Go back to your post that you're making and paste the link. Highlight that link and click the insert image button above.
It helps to have 2 browser windows open - one for the post, and the other for the picture site.
I'd hit it.