The easiest way to get the Url for you picture is to just copy the address in the address bar. Another method is to right click your mouse while on the picture and when the window pops up select properties. Then simply copy the address.
When you click the IMG button you'll get



If you want to practice right click on any of the images here and you'll see what I mean.

Generally you don't need to shrink your photos. But sometimes you do. For imstance you'll need to if you use photobucket.com. But it's easy enough by just editing the photo there. Otherwise it's usually done automatically when you upload the picture.

Good Luck!