to elaborate on Ike’s point…. the button in the tinymce editor is for exactly what Ike mentioned – for adding a url for an image located somewhere on the internet – its actually provided as part of the editor by WordPress, not Simple Press…
if you want to upload and image from you computer, you want to use the file uploader which will automatically insert it into a post… if you want to later on use an image that was previously uploaded, you should use the uploads viewer plugin for simple press which lets you browse your previously uploaded images…
Now, if the wp editor button for linking to image is confusing for you, you can remove it on forum – components – editor tinymce… just remove ‘image’ from the plugin list and the toolbar where its used..