Unfortunately, the algorythm of inserting pictures to this forum is something that's still beyond my understanding (I'll be grateful for an explanation for the blondes:)
Click where it says "browse". Select the photo on your computer, then click "upload now".
After that, it will give you a link, right under where it says "Direct Link for Layouts".
Copy that link, click the "Img" button once when you are making a post here, paste the link, then click the "Img" button again.
Then hit Submit and you're done.