This is from Craven's instructions in the Forum Help thread.
First you have to upload your photo to a photo hosting site, like Photobucket, Shutterfly, or Tinypic (to name but three), the here are his directions:
1) Go to the webpage (
photobucket, etc) where your picture is located.
2) Right-click on the picture and select "Properties".
3) Copy the URL in the properties box. Then Click the IMG button when you post and paste in the image's address.
Remember that you should not copy the address of the page that displays the image but rather the address of the image itself. One way to tell that you've done it right is the last few characters of the address. It should have the filetype extension of an image file (something like .jpg or .gif).
Actually, all I did was copy the IMG address and posted it here.