One of my clients has recently had difficulty uploading images and inserting into posts in the same operation. The floating Insert media panel seems to "hang" once a file is uploaded. Could this be related to the recent Java issues that have affected security in general? (An aside: Chrome seems to be better at dealing with Java problems than Firefox - possibly because Google and Oracle have met a fork in the road)
Closing this panel and switching to Media Library reveals that the image was indeed uploaded.
Going back to the post and clicking Add Media opens a new Insert Media panel that actually shows the image and one is then able to select that image and insert it.