If you simply paste the URL of an image file into the post, the forum software will display the photo. To create a link to the photo, highlight some words in the text and and click the <a> button. This will pop up a window for you to enter the URL of the image and create a link to it.
The problems with embedding photos to the forum are 1) large photos can screw up the format of the forums, extending the borders well beyond the resolution limits of their monitors, and 2) it uses a lot of bandwidth on the server that hosts the photo--every person who opens the thread makes a call to that server and downloads a copy; the traffic from this site alone isn’t going to really impact anyone, but it’s not a good practice.
That said, if the image is relevant to the discussion and is of reasonable size, there is no prohibition against embedding an image. Creating a link is usually the best way to go, however, if you’re in doubt.