I wonder what does not work?
I select choose file (button under attachements) and can directly select a file from my computer. You will find the photo under your post as an attachment.
If you want to post from a hosting service you select img above and paste in a link. Better, because you directly see what the subject is about and it makes post more readable.
Example:
I pasted http://imageshack.us/a/img854/6121/s4sa.jpg in the img screen and this is the result:
