Don't know if this is a bug or a problem on my part. After I uploaded an image to my webserver, it appeared nicely in the browse section of the WYSIWYG editor. Could also drag and drop the image into my post. However, the image would then refuse to appear. Looking at the code, it was providing the wrong URL for the image.
I have my WordPress installation setup in a sub-directory of my main web-root. However, when dragging the image from the browse section, that sub-directory as missing. i.e.
"http://mydomain.com/wp-content/uploads/2006/06/pic.jpg" instead of "http://mydomain.com/blog/wp-content/upload/2006/06/pic.jpg"
I do have the WordPress URI set to domain.com/blog/
Has anyone else seen this behavior?