How to insert images to articles from my desk top?

I am just preparing my first article in the new HTML format. I have a few doubts.
I have gone through article submission article of admin.
Yet, I don't know how to submit pictures from my desk top. I think the code,
<img src="http://www.boddunan.com/images/logo.png" alt="Boddunan Logo" />
is to insert pictures directly from a site.
Can anyone help me please?
One more doubt.
I have copied from a notepad to a text editor showing 'Toggle HTML mode'. Hoping am doing the correct procedure. If not, please guide me.