Your picture does not even have to be hosted at your own site, or a hosting site. It must, however, be somewhere on the internet.
If you want to post a pic here, find the picture you want, right-click on it (the pic) and select properties. In the properties box that opens, you'll see a quite long url string. Highlight that string using left click and drag. When it has been highlighted, right-click the highlighted url text and hit 'copy'
Then come back here, click on the little picture icon ...and in the little url box that opens, right-click and hit 'paste'
Your pic is now ready to be added to your blog entry. Hit ok ...and you're good to go.
Sounds lengthy and complicated, but with practise, its a piece of cake.
Good luck.