Since update to Phpbb 3.x.x forum, you can upload images from your pc, or you can follow what Backfire has posted
Images can indeed be shown in your posts.
First of all you need a web host. Basically in order for people online to be able to view it you will have to put it online first.
A good site for hosting is http://www.imageshack.us/
. Since it's free and easy to use I alway use ImageShack.
You will have to upload your picture from your computer to your web host.
If you are using ImageShack then all you have to do is click on the browse (Durchsuchen in german) button, find the picture you want to upload and upload it.
Now your picture is uploaded you will need to copy the address so you can paste it later.
Please copy either the 'Thumbnail for forums (1)' Link or 'Hotlink for forums (1)' link.
Now you finally have to post the link to your thread!