OK - step 2 ...
Pop in to your gallery - and double-click the image you want to insert so that it displays full size.
Right-click on the image
Choose "Properties" and left-click it.
Highlight the image location URL from the property sheet that pops up and go Ctrl-C to copy it to the clipboard.
Now go to the post where you want to insert the image ...
Click the Insert Image button (the icon with the thick medium brown border around it). Erase the contents of the box that pops up - press Ctrl-V to paste the new URL into the box - click OK - and ...
you're all done