I think you mean, when you want to include a picture in a post (or PM). You click on the icon, a dialog box opens and asks you for the URL of the picture. If you found the picture online somewhere, it'll have a URL beginning with "http://". Even if it's only on your computer, it'll have a URL of sorts (beginning with "file:///") but you'll only be able to use that URL to view the picture in your own browser, not in a post or PM.

You can upload an image from your computer to one of your albums at PC (and then get the URL for the picture from the album) but if you keep doing that every time you want to post a picture, you may end up with a lot of albums. If you delete a picture from your album it'll disappear from your posts as well.

By the way, if you opt to make an album private rather than public it's possible that not everyone will be able to see the pictures you post from it.