Hmm not sure. I use the picture symbol with the floppy disk in the writing tab above the posting box for uploading my pics (with servimg) and I have not had an issue. Once you press the button you should have a pic like this
Once you choose the file, press host it and you should get a box of code. Copy the middle one and post it into your text box and it should work
If that does not work then I am afraid I do not know what the issue is. It might be worth getting another pic hosting service, like photobucket etc, and trying that way.
Hope some of this helps anyhow
SC