If you are doing a Quick Reply, you have to click on the Go Advanced button below the Message box to get to another screen where you have the option to click on the Manage Attachments button which will open a new window for uploading or to click on the paper clip icon
at the top of the Message box which will also open a new window for uploading.
If you have clicked the Post Reply button, just click on the paper clip icon
which will open a new window for uploading.
In either case, then click on Submit Reply to display your post with your photos embedded.