Well, there are two ways really
The best way is to use an account with someone like www.photobucket.com and upload your pictures to there. You can then copy the [IMG]....... text from there (listed under the picture once it's uploaded) and paste it into your thread.
The other way is to 'browse' button on the little bit below the text editor window, you'll get a pop-up asking you to pick a file, once you have chosen one you can upload it (green upload button). This method is limited and takes up server space off TMF, why is why the photobucket method is better.