When we set the forum we decided that as there are plenty of options to host images so that they are in your control and not TDF's we removed the option to upload to the TDF server.
Options include Facebook, Flickr, Photobucket, Tinypics, even Dropbox. If you don't have Dropbox, here is a referral link which means we both get an additional 500Mb of Dropbox storage space for free.
The URL needs to be pasted into the text box when you select the picture frame icon above.
Upload the image to Facebook. Navigate to the album, select the photo. Right click on the image and select the URL of the image you want. Paste it into the URL text box.
Upload the image, navigate to the image. Select the dropdown 'Share', Tick "Grab the HTML/BBCode", select BBCode, copy and paste the BBCode into your text, delete everything apart from http://farm8....jpg, recopy that text and paste it into the URL text box
I have not used Photobucket so can't comment, but presume the technique is broadly the same.
Copy the image (of size approx 600-800 pixels across) into the 'Public' folder of Dropbox and then right click on the image in Explorer or Finder and select Dropbox>>Copy Public Link from the menu option and then paste that into the URL space above.
If you have any more questions, please do not hesitate to ask.