To insert a photo, copy and paste the url and then highlight and click on the little postcard icon at the top of the advanced reply window. Or type square-end brackets that enclose "IMG" in the front of the url and "/IMG" at the end.
To upload thumbnails from your computer, in the advanced window, click on the Manage Attachments button, then browse for the photo on your computer that you wish to upload. If it's too big, you'll need to resize it with a photo editing program.
I hope this helps!