It's really not at all hard. Just follow this little pic I made here:
Hover your mouse over the "Host an Image" icon, click it
Box should appear asking if you want to host an image. Click "Choose File" and locate your file and submit.
Then after clicking "Host It", this is where the second part comes in.
Click the "Copy" tab on the right from the "Image URL" Link (which is the 3rd link option)
Make the boxes you see such as shown to put the image in between as shown in the pic. (You can also use Spoiler to hide big pictures)
That should be it..and I love earthbound =Y