Inserting images into the content of a site is done using the editor (the image below is embedded using this method):

I've circled the image insert option - click on that and a window headed image properties comes up.

There are a number of steps that you go through from here

1. Click on Browse Server to select the image you want to insert - another window headed File Browser comes up.
2. If it's something new that you haven't included on the site before click on the Upload option / use Browse to find the image on your computer and then click on upload.
3. If it's something that is already on the website you can use the File Name listing on the right of the File Browser window to find the image and click on it.
4. Regardless of whether you've just uploaded it (it will remember the last one you uploaded) or if you've scrolled through the list to find it, once you have your image then click on Insert File
5. You'll then return to the Image Properties Window.

Here you'll see that the height / width have been automatically set (you can adjust if you want to resize the image).