To upload a picture into a post, do the following.
1) Click the picture icon in the editor. It looks like this: Attachment 195
Here's where it is:
Attachment 281
2) A new window will pop up. Click the "Select Files" button. ( Highlighted in yellow below )
Attachment 196
3) Now select your files...it will bring up the file selector in Windows, or Mac/OSX, or whatever kind of PC you are using.
4) Once you've selected files, the window will show them. Click "Upload Files". Again, I highlighted the button in yellow here:
Attachment 197
5) Once the picture is uploaded in the editor, you can put your pointer/cursor over the upper left-hand corner of it. A pencil icon will appear that lets you choose how large the picture is. You don't have to mess with this, but it's there if you want it.
That's it. Easy peasy.