We haven't changed anything recently. Are you trying to add it through the "Attachments and other options" link, or have you tired adding them to your album in Photo Gallery, above? Once you get used to it, the latter is the best way.
1. Go to Photo Gallery, click on 'Home';
2. Click on 'my albums'.
3. Click on 'Add Album'.
4. Create the new album, say - 'Fred'
5. Click on 'Fred'.
8. Click on 'Add an item to this album' or Mass upload if you want to load a lot.
7. For single uploads, go to the 'File to Upload' bit and click Browse to find the file.
8. Once you've done that, click on 'Submit' (Bottom RH side)
9. Once it's done uploading, scroll down to the 'BBC Embed code'. Copy and past that into your posting and the pic will appear.
It all sounds complicated but it's really easy, once you've done it a few times.