Looks good!

If it helps, in Edit mode (the mode that appears when writing a post or blog entry) simply browse and attach your full-sized photo using the box at the bottom of the page. The name of the graphic file then shows up in the list of attachments, also at the bottom of the edit screen. Put your cursor at the point in your text where you want to photo to appear, then go back to the bottom of the page and press the "Add to post" link next to your chosen photo.

The actual photo doesn't appear on the screen in the edit mode, but a reference to it should show up at the relevant point in your text - and when you actually post the message, your photo should magically appear.