Doug, after you click on the Insert Image button it will open another little window. At the top, click on the From Computer words, then click down in the lower right corner the words Basic Uploader, then click the Browse button, pick your picture, then under the location of the pic, it says UPLOAD Files, click it and it will go from there. Just a reminder, anything with a LARGE file size it will probably fail on, resize all your pictures to 1024x1024 or lower.
The above pertains to using the forum attachment feature, and will result in the clickable thumbnail style photos. Another option is to use a photo host like Flickr or Photobucket and then post a link here. If you choose the IMG style link offered by those hosts, images will be displayed inline full size.
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