You can't insert an image from your computer using the 'Quick Reply' box at the bottom of each page, you need to use the Reply button. When you're in the Reply screen, click the button for Additional Options. Once that's opened, click 'Browse' and select a picture from your computer. Any picture or combination of pictures that exceed 550KB won't be accepted. Once you've selected your picture click 'Post' as normal and your picture should be uploaded to the server and present in your post
You can also insert images using an imagehost such as Photobucket. Upload your photos to the host and they will provide you with the necessary codes for use on forums. The one you need is called BBcode.
HTH