I have never been able to get the paperclip icon to work. I use "go advanced" (because of my browser protections, I have to hold down CTRL when I click, then the Manage Attachments (again, holding down CTRL). That brings up the upload menus, because I've already resized and downloaded my pictures I am good to go once I access my Download directory. That is the point where Quiltwoman44 mentioned that you have to resize the window, dragging it out to the far right to find the Upload button. Once that is done you can shut that window and go back to the Submit Post button (without doing the preview).
File sizes have to be smaller than the 5 MB, that is number for all images and not just one.
If it doesn't work the first time but your message posts you have about 5 minutes to edit/try attaching again.