If you resize them as turbosnail mentioned, they have to be 150K or less. Then you can use the 'Insert Image' button in the toolbar when you're entering/editing a post to directly upload it to the forums.
There is a maximum of 5 images per post (this includes the smiley faces).
This is what I use also, but the picture needs to be under 150k otherwise it will not show and will be a link instead. I use Lightroom to organize my pics, I have a preset for this site that when it exports its a certain dimensions and file size, I believe that others like iPhoto and maybe Picassa can do the same.