You need to get the actual URL of the image. Make the post with the file attached. Then, view the attachement. This will give the actual address of the image, which you can use in the image tag.
Code:
[image]http://www.shrapnelcommunity.com/threads/uploads/321354-bil.jpg[/image]
Edit the post you just made and insert the image code. Disable the "mark as edited" option to avoid marking the post as edited, which in this case is pointless.
This image is a little large though, so you might want to reduce the size and reupload for the image in the post. You could make it into a link pointing to that larger image like so (make sure to enable HTML in your post before you make it):
Code:
<a href="http://www.shrapnelcommunity.com/threads/uploads/321354-bil.jpg"><img src="url of smaller sized image"></a>