Go here, scroll down to "Miscellaneous Options", then check the box labelled " Enhanced Interface - Full WYSIWYG Editing".
This will add formatting options to your reply box:
Whenever you want to upload an image, click the image icon (highlighted above), then either copy and paste the image's url into the box, or upload it from your computer.
You can also embed video into your post in a similar fashion by clicking the icon immediately to the right of the image button.
Rudy is a robot