Please make sure the file name does not contain any spaces. It will upload just fine, but will not embed properly once pasted into any posts if the filename contains spaces.
Example: file name.jpeg (Will NOT work) filename.jpeg (Will work)
Please try that, I'm pretty sure removing the space(s) will resolve the issue. If the problem persists, report back here and we'll help you further.
yes it does, i had the same problem and CuteGurl helped me...thank you CG :)