I'm running WP 2.0.2 on Linux. My blog address is:
When I upload an image using the upload facility in post.php it uploads fine and I can see the preview.
when I drag the image to the editor it looks fine and I see it in the editor
When I publish the post with the image, the image link gets mangled. See example at:
The image link should be:
But the editor is breaking it upon publication, making the link: