You can upload pictures directly from your hard drive to include in your post by using the "Attach" box. The "Attach" box shows when posting a new topic or a reply, but not when using "Quick Reply".
Images must be 150 KB or smaller. There's a maximum of 4 attachments per post and the total of all of them can't be more than 300 KB.
If you resize the pictures right, they don't have to be big files to be clear. Just downsize them to 700 or 800 pixels wide and keep the jpg quality factor lower (50 or 60 is fine). The jpg quality factor is key - it takes up a lot of space at 80-90, but it doesn't really make a better picture. http://www.irfanview.com/
works well and stores them with a little better picture quality than some of my other photo programs and is free.
You can also to a picture hosting site like Photobucket
or Google's Picasa
. Both are free and pretty easy to use.
You can then copy the direct IMG code and paste it into your post. Again, you want to keep the size down to 700-800 pixels wide so it fits on the screen without scrolling and so it doesn't take forever to load for people with slower connection.
Also, make sure you crop the picture(s) to show only what needs to be shown.