To add a picture full size in your post (only a good idea if the picture is small!) click on the little yellow icon with mountains above the post box, and put the url of the image in the pop up box.
To add a thumbnail that you click on to see the full size picture, click the Go Advanced button, then scroll down until you see the Manage Attachments button - click on that, select the files or enter the url, click Upload, wait for it to finish then close the window.
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