There seem to be a number of users (myself included recently) that are having trouble understanding how to attach and upload images.
I think the problem is that the button to upload the image says "Host it!" instead of "upload". It wasn't clear to me that I was supposed to press that button after attaching the image from my computer. After four tries of not knowing why my image wasn't uploading I finally tried clicking the button and then it worked.
Perhaps a change from "Host it!" to "Upload now!" or some such would be in order?