Photobucket
http://photobucket.com/
Flickr
http://www.flickr.com/
just to name a few. I use Flickr, so that is what I will be using for this demo...
Step 1: Upload your photos to the web service. See their page on how to do this. Most sites will allow you 200 images for free
Step 2: Open the image in the web application. In Flickr, you need to select the "All Sizes" button:

Step 3: A lager version of your picture will appear. At the bottom of the page there will be a link to that picture. Highlight and copy this link to your clipboard (Ctrl + C for all you Windows users)


Step4: In the LBG post, at the top, select the "Img" button once. You will see the brackets where your cursor was....

Step5: Paste the link to your picture between the brackets...

Step 6: Select the "preview" button at the bottom of the post to make sure all your links are good.
That is all there is too it.
Note: If you delete an image in your web storage page, the image will be deleted (dead link) on the LBG post
Jason