The file upload problem seems to be related to how you're inserting the image. Here is some of the code from your entry:
<IMG id=pic_item_id_3 style="WIDTH: 201px; HEIGHT: 154px" src="file:///C:/Documents%20and%20Settings/Amy%20Cheng/My%20Documents/My%20Pictures/Temp/Thomas%20Ex/Temp%20132.jpg" align=absMiddle><IMG id=pic_item_id_1 style="WIDTH: 197px; HEIGHT: 145px" src="file:///C:/Documents%20and%20Settings/Amy%20Cheng/My%20Documents/My%20Pictures/Temp/Thomas%20Ex/Temp%20139.jpg" align=absMiddle>
As you can see, it's trying to link to an image that's on your computer rather than an image that is uploaded to the site.
To be sure, let me verify how you're uploading your photo:
1) Add a new blog entry
2) Click the "Add a photo" button at the bottom
3) Select a image to upload by clicking "Browse..." and selecting the appropriate photo.
4) If you have multiple images to upload, continue to select them by clicking "Browse...".
5) Click "Upload All" to upload all of your selected images to the server.
6) If you wish to place them within your entry in different places, select the photo that you want to insert and click the "Insert" button.
If you're still having problems, please let us know.