I'm pretty sure there would be a how-to on here somewhere but I'll give you the method I use. I wrote this on another site but it is still relevant here:
My version of what happens when posting pictures....
The main thing to get your head around is that the site (and this goes for almost all forums) don't actually hold your pictures due to space limitations (photos takes up tons more space than words), so what you need to do is to have a pointer to where the picture is stored. Because most of us don't open our hard drives up for all the world to come and look at another location needs to be found to hold the picture.
The easiest solution for most of us is to have a photo account with a third party (i.e. Photobucket, Servimg, etc). These third party locations give you a link that you can paste/insert into your post.
When the forum software reads this geek-speak it says to itself "hmm, he wants me to show the picture that is over on that Photobucket site, I'll just go grab it and put it in the post."
So the site I use is SERVIMG.COM, its a free site, allows subdirectories so you can sort your photos, I haven't come up with a file limitation yet and I'd be well over 1,000 images up loaded by now. You need to create an account, just go to the main page, doesn't take much time to register.
Once you have an account just follow the prompts to up load, it will ask you where the image is located and give you a screen to access your own internal hard drive, there are a couple of other options for file size etc, but for the time being just keep with the defaults until you get to know the site. If you are successful with the upload to their site you will end up with a screen something like this (this is an old image so it might be slightly different now - I think the COPY buttons no longer appear):
What you need to do is to extract the Bulletin Board code (BBCode), this is what the forum needs to point to the picture. Click on the URL for the IMAGE under the BB Code, it should highlight the complete line of code, then COPY this to your computer's clipboard by pressing CTRL and C together.
Now go back to the forum to the post you want to put the image into, put your mouse cursor in the message at the location where you want the image to appear, and then press CTRL and V to paste the BBCode, you should see that string of URL characters appear. By using the CTRL C and V keyboard short cuts you don't need to use the Forums own "post and image" buttons. You can add, edit your text in either side of the BBCode as you need to, one trick I do is to insert three blank lines where I need to put the picture then go back to the second line and CTRL V the picture there, that then puts a space on the top and bottom of the image when its viewed.
It sounds messy and convoluted at first, but you will soon get used to it and it will be second nature before long.
Good luck.
BTW there are a ton of free photo hosting sites, I stumbled across SERVIMG years ago and have never had a need to change. One thing to remember is that these images are links, so if you close or erase photos on your hosting account, then the links also disappear and then it wont be shown on the forum - you might have seen this in some older post. Also if you link the SERVIMG to another URL instead of up loading from your own drive, if that link breaks so does the image on your SERVIMG account so again the picture is lost, this would hold true for most hosting sites.