Two ways...
Above in the blue bar you'll see Index - Userlist, etc... look for Uploads. Click on that and you can upload directly from your computer
or
use a free hosting site - such as photobucket, flicker etc... Once you upload your pictures to that site, highlight and copy the URL. In the reply or text box click on the "Img" button which will give you two sets of brackets:
Insert your pictures URL inbetween the brackets. Click preview and you'll see your picture.
You can also upload them using the "Uploads" tab above, but the pictures are limited as to the size. So, if they are not uploading, you may have to resize them first.
If you are using XP you can resize your pictures in Picture Manager. You can find Picture manager by going to: All programs, MicroSoft Office then MicroSoft Tools to Picture Manager.
Open your picture and Save As and rename so that you keep your original photo.
Then File - Open
Click on Resize. Look to the left and select the size you want