The image upload feature is malfunctioning. We are working on a solution. Until we fix the problem you will not be able to upload images directly from your computer's hard drive. Instead you will need to upload them to a server, such as, Photo Bucket, and then copy and paste the image file's URL into the field that "pops up" when you click the "Image Icon" (indicated by the RED ARROW illustrated below). Many of these photo storage services are offered free of charge. Alternately, if you can't figure out how to do this yourself, you may send the image to me in email and I will do it for you.
If you need further information see this tutorial for instructions. It's easy.
I apologize for any inconvenience this may cause. Thank you for your patience.