When you click on "reply", you have two ways to insert a picture.
If you are uploading a picture from your computer, click on the paperclip icon in the toolbar. That will open up a new window allowing you to browse your computer to find the picture, then upload it. Once the upload is complete, just close that window and click on "submit reply".
If you are adding a picture from a website, there is an image icon in the toolbar. When you click on that, it will open up a window where you put the url of the image into it.
Let me know if this works for you.