If you simply want to include the pic in your post as an attachment, and assuming the image is already stored on your computer, go below the reply window to where it says "Attach file". Click "Browse". Browse to where on your computer the image is located. Choose to "open" that file. When you hit reply the attached photo will be there in your post.
If you want the image to actually show up in your post then it will need to be hosted by some outside image hosting service such as ImageShack. The formula for that is then basically the same. Browse to your image, dl it to the host, copy the url complete with image (img) tags.