It's not painfully obvious, so here is a quick tutorial on how to add images that live on your computer to your posts:
1. When replying to a thread, click the 'Go Advanced' button next to the 'Post Quick Reply' button at the bottom of the page.
2. Click the little paper clip icon - this is the icon that indicates attachments.
3. You should see a little pop up box titled 'Manage Attachments'.
4. Click the 'Browse' button next to any of the ten fields.
5. Browse to and select the image file you'd like to upload from your computer.
6. You can select up to ten images per upload batch.
7. Click the 'Upload' button.
8. Click 'Close this Window'.
9. You should now see your image files listed down the page below the text box where you are typing your post.
10. You can select 'manage attachments' if you'd like to add more. You can attach up to 20 images per post.
11. Once you submit your new post, you should see thumbnails of all of the images you have attached. Click on the thumbnail to see the full size version.
*Note that you also have the option to link to images that live on other websites such as flickr by selecting the little image icon and entering the URL to the image - this is available from the 'quick reply' editor, without having to select 'Go Advanced'.
Let us know if you have further questions, or are running into errors or problems when attaching images.
Enjoy.