Above the content that you're typing in, you'll see a little toolbar. The first two buttons for for bolding and italicizing text. Next two are 'insert image left align' and 'insert image right align.' Not necessarily in that order... I'm just kind of winging it.
The problem is that you are trying to insert an image from the free section. Unfortunately, this is not possible for the time being however, we anticipate to allow usage of free images in blog articles in the future.
If you select an image from the commercial or editorial sections, there should be no error message or problem.
I had exactly the same problem. But I was not really understanding how to insert the image. You have to hit the button addimage and the you just have to put your image ID. What is troubling is that there is a "http://www." in the box which appears. You have to replace it by your image number ! That's it !
I agree that this message is rather confusing. Why not include a link after the message that leads to the images database. Seems so simple to me rather than having to scratch around and search for where. It might be intuitive to the designers but it certainly is not to me.