Here is a step by step. I had difficulty at first too, so I hope this helps anyone who is struggling with adding photos.
1. Click on new post ( you will be directed to new page).
2. Create title for your post.
3. At top of message box (like the toolbar), there is a picture icon. If you hold your cursor over the picture it should say "add image". Click on this. A new box will open up.
4. In the new box, there is a rectangle at the top with a "browse" button next to it. Click on browse. You will be able to look through pictures you have saved to your computer. After you have chosen the picture you want to use, click open. You should a link in the rectangle box next to the browse button that was blank originally.
5. At the bottom of the image box, there is an orange button that says "upload image". Click on this. It may take a little bit of time for the picture to upload (you will see a sign that says "your image is being uploaded to blogger"). After it has uploaded you should see the image in the box, and you click on "done". You will be directed back to the post, and you can write whatever you would like at that point.
6. You can publish the post as normal at this point, and see your image.
I went through the steps on the picture above to make sure I gave accurate instructions.
Hope that helps everyone and isn't too tedious of directions. ( tend to be too detailed at times with instructions).