The Icons for adding a picture to a PM are the same as adding a picture to a post.
I have added pictures in a PM before and it worked the same way as posting a pic in the forum:

Click the "insert image icon " , select the picture file from my comp , upload the picture file to the PM.

Its been awhile since I have attached a pic to a PM .Something has changed since.

Clicking on the "insert image" icon now in a PM has a popup window to select a URL of a picture you want to upload from a website
You cannot add or upload a picture from your comp to a PM anymore like you can to a post in the forum ?

They used to work the same way. Did the system change or am I doing something wrong.