Putting an image in a post

I'm trying to help someone use iMovie, and used Grab to make a small screenshot which I saved to my desktop as a TIFF. I then used the "Insert Image" button to insert that screenshot in the text.

But I got an error message when I posted saying "The content type of this image is not allowed." Why not?

There are threads in this community that talk about posting a link to an image on Flikr etc., but what exactly is that little "camera" button in the Start A New Discussion for if not things like this?