The attachments upload directory has been messed up for... a long long time now. You need to use the option for 'i have my own pic' and link to the image (right click on the image, click 'copy image location', paste that in the box)
Make sure that whatever website the image is coming from is reliable and allows external linkings. If not, host the image on Picasa, Photobucket, etc. and link it from there.
I'd like to hear my options, so I could weigh them, what do you say?
Five pounds? Six pounds? Seven pounds?