I've done a search for this, however all the posts do not seem to relate to the current version.
I have a new installation of version 3.5. I can upload images without issue but on the live blog they display as a broken image. If I right-click and select to view the image in a new tab I get a 404 not found. If, however, I download the image, it downloads fine and I can view the image.
Since this is a new install I tried deleting my installation and reinstalling. I am currently hosting with Hostgator on the baby plan and using Fantastico for the installation of WordPress. My other blogs on other domains within the same hosting plan are working ok.
Interestingly, when editing a post, if I use the Visual option all the formatting tags are not visible but they are when using the Text option. I was orignally using the theme ZeeNews, but after the reinstall I stuck with the default theme of TwentyTwelve and it doesn't seem to have changed the outcome.
A link to a blog page is here. Thanks :)
This is driving me quite batty! Thanks in advance for your help.