If you click insert picture in a PM it will give you something like
[img width=640 height=480][/img]
You need to upload your picture on an external site and then insert the direct link to the photo in between the 480] and [img
I prefer tinypic.com as it's usually the fastest. Go to
www.tinypic.com (or imageshack, photobucket, etc.), browse for the pic you want uploaded, hit upload, then copy and paste the 2nd link given into your PM.
You don't need to click "insert picture", just copy and paste the code tinypic gives you and you should be good to go. It should look like something like this:
[IMG]http://i44.tinypic.com/mal8j6.jpg[/IMG]