Posting pictures is basically a three step process.
1. Upload your pictures somewhere. Photobucket.com is popular. Tinypic.com is good. Some people like to upload them here and that's fine too.
2. Get the address of the picture. You may have to right-click the picture.
3. Put the address of the picture into [IMG] tags. You can use the
button if you want; it will provide the tags for you.
Some sites, like the ones I mentioned, will provide the address already with the [IMG] tags for you to copy and paste, in which case you skip step 3.
Here's an example:
To see how I did it, click "Quote" and you'll see my entire post including the [IMG] tags. Note how the address is followed by [IMG] with a slash '/' in it.