First you need to upload the picture to an imagehost such as
Photobucket,
ImageHosting.com,
ImageShack or any one of
dozens others.
Once you've uploaded it to one of those sites it'll give you a link* you can use to display the image and that's what you put between the image tags.
*For example, in the image above on imageshack, clicking the "i" button at the top left (located to the right of the thumbnail of your image) displays the screen shown. You can use the link in the "Direct" textbox between the image tags or (if you're not too confident about it) copy everything in the "Forums" box and paste it into your forum post.
If you do the latter most sites will have extra links or information that you'll also be copying into your post, though. If I used that method with the example, the part with the url tags would place a link to my gallery at the site beneath the picture.
