A much easier way than Neutralino's is to become a paid member of TOEQuest and Robert will give server space to store your images which are easily uploaded by the 'uplaod photo' button in 'gallery'
Then all you need to do is to enclose this code in any post in which you wish to display an image
http://www.toequest.net/gallery/data/509/Kolkatta.jpg
where 509 is my user directory, and Kolkatta.jpg is the name of my image
and enclose inside the image operators eg: [img] .........directory and image ...... [/img]
cool bananas ... greg