David,
You can enter an image that is online by using its URL. So if the image is already online, you right-click it to get the address. If you have your own photo, I generally upload it to a shared album in Picasa. These photos have their own URL which is accessed the same way.
In the reply box, one of the options is an "image icon". Click that and it will ask about how you want the image placed, and then it asks for the URL. Copy and paste and you are all set.
