Issue -- cannot embed uploaded image in post

I have uploaded an image. I'm posting in a forum that allows image tags. I click the image button and paste the URL of the uploaded image and get an error message.

"Error. Invalid file"

If I cannot insert an image from a URL, why is the option to insert an image active in the toolbar?

We used to be able to insert an uploaded image into a post, if the forum allowed images. Now it no longer works.

Please restore the functionality that was available before the "upgrade"

thanks,