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I think I know what your issue is. When you're inserting a link to an image, you need to make sure that you're not duplicating the http:// part when the link is being pasted in to the pop-up box.
Have a go again, making sure it's not duplicated and if there's still an issue, mail me direct in to inbox and I'll have a look in to it for you in more detail.
Hannah from the WEbook Team
Here's an attempt to submit the image in this topic: