I like to personally backup my entire installation, remove the necessary old files from my server (except the wp-content folder and wp-config.php). And then, manually upload the new ones. It hasn’t failed me yet, but yes, it really does not matter.
That icon was removed.
You can insert images into your posts using the Add an Image button on the Add Media toolbar. After an image is inserted, you can edit it and make changes to the options by clicking on the image. This will bring up a small toolbar over the image. Click on the image button there and you will get a popup that has a lot more options to edit the image than our previous way of doing it.
You can still insert images using a URL with that same method.
