Not entirely sure Mbc, possibly a less then generous browser or a personal problem.
The method as you worked out is to select the paper clip attachment icon and then for local files use the top half of the frame to browse to your picture/s before hitting the upload button relating to the top frame. Keep an eye on the progress bar (bottom right) to check when it's all done. Unfortunately if you don't keep your eye on it to see it fill up, when you next look it is empty and your brain cells will start to spin wondering where it all got to. Once it's done close the dialogue box.
The same goes for pictures from other sites (by URL) using the bottom frame.
I've never tried to mix both local and remote pictures in the same post, so can't (don't

) recommend it.
If remote pictures become unavailable, because the remote site has dissappeared, temporary DNS problems (or worse) or because the picture account has been closed etc., then the result will possibly be a red cross to indicate that the picture was unavailable.
It could be that Veg was actually commenting on one of your posts other than #7 when you aced it. He didn't actually say, so don't lose any sleep over it.
