I've tried pasting the screen shot but with no luck! but basically this is what shows up on the "Add an Image" window
Add media files from your computer
Allowed file types: jpg, jpeg, png, gif, pdf, doc, ppt, odt, pptx, docx.
Choose files to upload
You are using the Flash uploader. Problems? Try the Browser uploader instead.
After a file has been uploaded, you can add titles and descriptions.
You are using the Browser uploader. Try the Flash uploader instead.
108.0 MB used, 2.9 GB (96.5%) upload space remaining. You can upload mp3, m4a, wav, ogg audio files and increase your available space with a Space Upgrade. You can upload videos and embed them directly on your blog with a Video Upgrade.
The "http error" pops up, highlighted in red and the image is not uploaded.