You appear to be running firefox, right? Can you start it in safe mode and check to see if that solves your image upload problem? In the start menu group for Mozilla FF there will be a normal "Firefox" and then a "Firefox (safe mode)". That disables all extensions, which might be causing problems.
Imageshack or photobucket is a better overall solution for images on the web.
Are you using any software firewalls? Any http proxies?
We've gotten scattered reports of security token problems but I can't see what could be causing them.
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