The picture above...
This was done by copying the URL of the photo into the message, where I wanted it to appear, and then highlighting the text and pressing the button (with a picture on it) above, right of the "afro emoticon"
You will need to have your images online prior to posting the message, lest no image will show. You cannot (I believe) upload directly to mud-club.
I use imageshack.us for image hosting, free and reliable to date (approx 6 years now).