Here's What's Happening....
[Does anybody know] why a picture from my computer cannot be inserted on a PM? As far as I can tell, you can only insert an image from a URL, which doesn't make a lot of sense.
I don't think Lamont can "fix" this. The "problem" is inherent in the forum software. Actually it DOES make sense.
When you upload a picture to a forum message, it is handled as an attachment to your message. Every attachment is saved by the forum software, in a condensed format, separate from the message text. The software then enters the attachment (picture) in the proper place when someone is viewing the message. You may have noticed that when composing a message in the "advanced mode" there is an option for managing attachments. Using that option, you can actually find any picture (or other attachment) you have ever uploaded and use it again in another message without re-uploading it.
In contrast, PM's use a logic that is somewhat less sophisticated than public forum messages. This logic does not allow for the insertion of attachments of any kind. (As Bfromla suggests above, this saves a lot of server space.) However it DOES allow for the insertion of outside URL's (web addresses), which takes no additional server space. That is why you can insert any picture that you, or someone else, has saved anywhere on the internet as long as you know the web address of the picture. If you do not have your own web site, you can always save pictures in the cloud (Drop Box, MS OneDrive, etc.) or use a web photo program like "Google Photos" (formerly Picasa). (You can also insert URL's that are internal to the forum server - see next paragraph.)
Member albums also use a condensed format for storing pictures, which is similar to attachments. When you follow akspyderman's suggestion above, what you are actually doing is pasting the internal forum URL for the already saved picture into your PM. You can also do this with any picture that has already been posted anywhere in the public forums (by yourself or any other member), since each of these has it's own internal address on the forum server. (Of course, you can also use this method in public forum messages.)
To find the URL of any picture (internal to the forum or external), some browsers (like Chrome) give you the option of copying the address of a picture when you right click on it. Where this option is not present, you can usually "open the picture in a new tab" and then copy the URL from the address bar of that tab.
Hope this explains the "problem", and gives folks some ideas for workarounds.