Once you change the setting as mentioned above, to post an image all you have to do is click the "Insert Image" icon above the text box that you type your message in. Here's what the icon looks like: Name:  insertimage.png
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You'll see something that kinda looks like this, and you can now choose between add an image from your computer, or add an image from a URL:

From Computer From URL Add an Image from your computer

Allowed Filetypes: jpg, jpeg, png, gif