If its a pic from a website, you right click, and select "Copy URL". Then you use the IMG code:
[IMG*]your url here .jpg[/IMG*] (you remove the asterisks before posting)
If it is your own picture, you have a couple of options. You can upload it into tinypic.com and then copy the IMG code from there, or you can use Photobucket (which is what I use) and upload your pics there. I like photobucket because I can also edit the photo there before posting. Once you have your pic loaded, you can edit, resize, enhance, etc, save it, and then use the IMG code to post here as well.
And OMG I totally almost just typed in fakecrew as a url. This day needs to be over.
I got it to work! Just right click on the pic, and select "copy image url", then its automatically in your clipboard, so mosey on back over here, and use the code I posted above with the asterisks removed!
You have to go to modify profile and then enter the url (from photobucket or tinypic) of the pic (NOT the IMG code), and make sure its small enough...mine is set to 65 width and 90 height.