heh a lot of people ask how YOU are doing that!
The way to attach images is:
1. Post new reply / post new thread
2. Scroll down to "Manage Attachments"
3. Browse to the file on your local computer and click 'Upload".
4. Close the manage attachments window
5. Post the reply/thread.
I'm not sure what you're doing differently, but yours are always embedded and use the default vBulletin image browser instead of the IIS image browser.
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