there are a few methods.

1 you can browse for the attachment and hit the 'add attachment' button and that will upload and host the image here

2. you can link to an external image by using the img buton above. Like I have a picture located here
http://www.jeffersonfreestate.org/bluDemon/thumbs/blu_demon_001.jpg

to put that into a message you can do

Code:

[img]http://www.jeffersonfreestate.org/bluDemon/thumbs/blu_demon_001.jpg[/img]

so that looks like


You can generally find the URL of an image hosted on another web page by right clicking on it and doing 'properties' -- depending on your browser.

There is another isse regarding linking to images hosted on other sites. Some sites (dono about yahoo) block external linking because they don't want you linking to it from all over and driving up the bandwidth costs. It may be that yahoo won't let you do a link. If you search the yahoo help files they'll probably say something about that if they don't allow it.

best of luck!