Once the post has been saved, click on Add/Link Files below the post edit field (make sure you place your cursor where you want the image in your post BEFORE you click the Add/Link Files), then choose your file from the "library" or click "Choose File" then select the image from your computer and choose ">Quick Upload", then click the box next to it, and choose "Go!" to "Insert IMG/link into post"

Thanks for that.