The "local file upload" is being cantankerous.
Go to an image hosting website i.e.
http://imgur.com/ http://imageshack.us/ http://photobucket.com/, upload the image there and the will give you a "direct link" then you can post it here. Let me know if you wants some instructions :)
If they are on facebook already you can right click the photo in facebook, "open image location" and copy the image address.
The image address will look similar to
https://fbcdn-sphotos-e-a.akamaihd.net/hphotos-ak-snc7/123465798.jpg
Once you have the image file name click on "Insert image" go to the "From URL" tab, paste the link in the appropriate place, make sure to un-tick "Retrieve remote file and reference locally" and Bobs your uncle.
Note: Bob could also be your Aunt, but, I think that's a discussion for Moe's Tavern.