egreis,
I’m a WP NUG and discovered that the upload functionality discussed in this post is pre-2.x. In those versions there was an Upload tab/link located in the same menu as the Dashboard tab, Write tab, etc. You could use it to upload files, images, etc. It also provided a set of display options for that file, including thumbnail creation. That functionality was taken out for whatever reasons in 2.0.
If you want that funtionality in 2.0 try this plugin. So far it works fine in my 2.0 CPanel-based install.
Good luck,
I’m new to WordPress, and was having an incredible amount of difficulty getting images to show up in posts. I searched for three days on that topic, finding more info about upload problems than anything else. I happened upon this post, turned off the rich editor as described and Dakka! Dakka! images display in the posts.
Much appreciated.