When using tinypic.com to host your pictures, you can select the IMG code
and paste it directly in the post. Do not use the Message Window's Image tool,
If you have a large picture and need to resize it, then you do want to use the Image tool. In this case, use the bottom URL, Direct Link for Layouts, to get the URL. Paste it in the Image tool's URL field. To resize, ues only one of the dimension fields, usually the width. The display engine will automatically adjust the other dimension.
To explain further, here is what is going wrong. The Image tool automatially inserts the img and /img tags. Since you are using a URL that already has these tags, there will be double tags, which will not work.