I also set up a free account with webshots.com and it is actually pretty easy. You post your pictures there. When you want to post a picture here, you:
1. go the the webshots site with your photos, easy
2. open the photo of interest, easy
3. click the "publish to site/blog" button, easy
4. click which version you want to copy to clipboard, easy, which logically enough, copies it to your clipboard
5. go back here to your reply and hit "control V" to paste the thumbnail pic in your reply.
Easy.
Here's a sample of my paper air filter with custom filter housing:
click the small pic to see the big pic
finest regards,
troy