At the top of each page, is a "user CP" link. To verify your settings are correct, click the link and scroll down the page. On the left side of the page, there are several things you can change. For this, you will need to click on "Edit Options"
At the bottom of the options page, is the message editor interface box. Make sure you have the wysiwyg option selected. It will look like this:
If it is already selected, great! Save changes and go back to the forums.
When replying to a post, or making a new post, you will see the post editor box. If you wish to insert a picture in your post, click the "Insert image" button. It will be here:
When you click that button, a small box will come up and ask for the URL to the image. You will need the direct link to the image you have hosted on Photobucket, Webshots, etc... Copy and paste the link into the little box and click ok. The image will be inserted and you will see it right in the reply!
If you don't wish to host your pictures online, you can attach them directly to your posts. Below your post editor, there is a button. Scroll down, until you see the button labeled "Manage attachments"
When you click that button, another screen will come up.
Click on the "Browse" button and find the file on your computer. Once you have all the images attached that you want, click the "Upload" button. That will attach the images to your post.