I did a test by using the "insert image" icon above and it worked fine. Then I tried to do it by using the "go advanced" tab on the bottom right of the reply window, then scroll down to the "manage attachments" tab and then "upload from computer" in that new window. That method failed.
Don't want to bring up an old dead horse, but the latter method is how I always used to do it and that's where I could always see all the old photos I had previously uploaded, a library of sorts. Now my photos are never stored here any longer so it's become a "one and done" type of upload.
Maybe those are related, maybe not. Hope this helps.