Okay I'll try my best to explain in steps as easy to follow as possible.
To upload pictures on this website, click on the Photo Album link on the menu (left). Right under the category listings, just before the photos start, you will see a line of text There are X number of Images in our Database. Add Photo . Click on Add Photo
It will bring you to a page to upload the photo. To conserve space on our website we set the maximum photo size to 640x640 and file size to 100,000. Don't worry if you can't figure that out, the system will just tell you its too large... just a pain though sorry.
Type in a title, put a little description if you wish about the photo. Choose the best category this photo will fall into. Lastly upload by clicking on 'Browse'. A window should come up on your screen and you need to find the picture file you want to upload. Select it (very much like looking for a file using MS Word etc). If you're satisfied, hit submit and voila!
As for the picture in the document, you need to save the picture on its own. What I do is open MSWord, right click and select copy then I fire up one of my photo editors, even the free Irfanview will do, and paste it into the photo editor then save as a .JPG file. I don't know about image loss I'm sure there's some degree but for web use it should be ok.