First, upload your images to your website or a photo sharing site, such as Yahoo Photo Bucket or Picasa Images by Google.
Then, copy the image URL of the image and insert it between these tags:
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Make sure to include the "http://" part of the URL.
If you have a website, simply upload the photo to your site and then link the URL of it in the manner described above.
Or you can paste an Image URL and then highlight it and click on the "Img" button in the menu above to wrap the tags around it.