After you download your picture as an attachment, go to the Additional Options box below the Reply to thread box.
Right click on the attachment name (your picture), and select Copy Shortcut. Then click on the Insert Image Icon and paste the shortcut there. Just make sure there's only one "http//" in the line. That usually works for me.
You can also practice in the Software and Function Testing area:
http://thefiringline.com/forums/forumdisplay.php?f=32
This rifle isn't mine, but I saved the picture for some reason.