I found an addon module that improves posting images.
If you're sharp eyed you'll see the phrase "Insert image/file" below the text area when making a posting. Click on that. It's almost straightforward.
First you click the Browse button. That lets you browse your disk for a file to upload. Once you find the file to upload, click OK in the file dialog, and then click Upload button. It'll take a couple moments to upload.
If you click on "My Account" there is an "Edit" button. Click on that and you can customize your settings.
Most of it is explained on the screen.
If you upload an avatar (picture), the size has to be 85 by 85 pixels. The avatar will show up on any blog or forum posting you make. Currently it will not show up for comments, but maybe I'll enable this for comments.