You can upload a picture into a post as an attachment. When you reply to something, go the reply window
More Reply Options button. Under your reply box, you then have
Attach Files and then just choose what you want. When it uploads, you'll see it above 'Attach Files'. Then just add it to the post and put it where you want.
View attachment 311
Edit: Err... that's weird. I've uploaded a couple of pictures when I first joined, they showed as thumbs...
Odd. Um, so yeah, the picture is there, it's just not showing up as a picture. The url is the best bet, it's what people use to show a picture or gifs in their posts.