Use the Image tags in the Instant Mark up section. The pic you want to use will have to be online somewhere because you have to enter its url in order for it to post. You can't post something directly from your hard drive.
A lot of people use something like photobucket.com to store their photos and then post them from there. Of course if you want to post a pic from another website you can just copy its url and post it like this, for example: