First Click on the "Host an Image" icon.
You then click Browse, which will let you find the image on your PC.
Once you have found the image you want, click on it and you should see the file address populate in the block.
Then hit the "Host It' button.
You will now see three blocks appear with the image address in them.
Click on the "copy" button at the end of the bottom box labled Image URL.
Now click on the "Image" icon on the toolbar and you will see a white box appear with a little picture of a chain link and an ok button.
Right click inside the little box and choose paste. Then hit ok and you will see your image url appear in your post.
That's it! It's actually only three steps and quite easy once you do it a couple of times.