I use www.tinypic.com
Just upload the image, add tags if you wish, don't change any of the default settings. Click Upload. Then type the captcha. After that, it will take you to a page with a bunch of links and a small image of what you just uploaded.
Select all of the link inside the bar that say "Direct Link for Forums", copy, and paste in between the [img] tags (alternately click the button 4th from the end on the toolbar, top row, and paste the link into the box that pops up.
[/img] <--- Close tage for image (this goes after the url)
[img] <--- Open tag for image (this goes before the url)
Don't use any spaces between the tags and the url.