I'm testing out Microsoft's latest blog tool: Windows Live Writer, which is a WYSIWYG Windows editor that enables you to post to blogs like this one, of Live Spaces, MovableType, and so on.
I was able to post ink with Live Writer on a MovableType blog, but it doesn't seem to work here either. Hmmm. I bet it's a problem with the image settings in Community Server.
Update: Image settings could be part of the problem, however, it doesn't look like Live Writer knows how to upload images automatically after all. Instead, it just points to a file on your local drive, which means the image isn't going to be public to anyone on the Internet.