First click the "Post Reply" button. You can't upload using the "Quick Reply" box that automatically appears at the bottom of the page.
Then look for the "Attach Files" section underneath the box. It's below the "Miscellaneous Options" and above the "Upload your Images to ImageShack" part. Click the "Manage Attachments" button.
You'll get an option to Browse your computer for a file, or upload from a URL, and a list of the allowed file sizes (and in some cases, allowable widths) for each file type.
As long as your image fits the limits for the file type, when you pick your picture and "Upload" it will attach it. You can then click "Close this Window," and when you post the picture will show at the bottom.
Only one attached photo is allowed per post.