Problem displaying first image as a thumbnail

Hi there, I’m using the “magzine” theme, and I’m having some problems getting images to display on the front page as thumbnails.

I’m using the function from here:

http://wordpress.org/support/topic/retreive-first-image-from-post

It seems, if you check my website(Here), that the function is simply pasting the image URL into the front page, and the front page is refusing to convert it to an image link.

AM I doing something drastically wrong here?

I put the function code in the functions.php file, and then called it like it asked.

Thanks in advance to anyone who can help me.