I've been uploading images from my computer via the "browser upload" method shown here in the codex. Everything seems to go fine; I choose "Upload/Insert" and choose file, follow the path and upload a jpg or a gif or a tiff, choose the formatting, and insert into post. I've also tried "New" under "Media," uploaded from my computer re the steps above, gone back into the post and chose "upload/insert" and chose "from media library." Both result in a nice holding box with a question mark in the middle. Sometimes it will successfully load in the admin area but not on the published page. Sometimes it doesn't load in either area. The only fix I've found is to link to photobucket, but that isn't a good workaround for me as many companies block any data storage site and I don't want my images blocked.
I'm working in Safari 3.2.3, but I've tried it on a PC in IE Explorer, too. I'm in WP 2.8, but I had the same problem with 2.7 - all of which leads me to believe that I have some setting wrong, or I'm missing some fundamental step. Any guidance greatly appreciated!