Hi Jude -- Use the 'switch to full reply' screen and there's an icon above the message area which will open a window where you can copy/paste the url location.

As far as the pic itself, I upload to tinypic.com directly from my lappy. It's free and doesn't involve linking to any personal online accounts. Copy the url it gives you after the upload (bottom of the 4 or 5 address options it gives you, beginning with http://). MS will resize the pic to a default 400 pixel wide image.