Rick,
Let me clarify that MyEclipse 7.1.1 is based on Eclipse 3.4.1. You need to download Eclipse 3.4.1 Classic and add MyEclipse Plugin. Refer to release notes here – http://www.myeclipseide.com/module-htmlpages-display-pid-409.html . We are planning a new MyEclipse 7.5 release shortly (tentatively scheduled for a May end release) which is based on Eclipse 3.4.2. You need to verify the compatibility with Eclipse 3.4.1 for all the 3rd party plugins you wish to add to ME, else it will result in errors.
To upload images, instead of using the Quick Reply section, use [Post Reply] button or type your answer in Quick Reply and click on [Preview] instead of [Submit]. You should find the option to upload images.