The "image" button in the toolbar is for embedding an image from another website. To upload a picture from your computer, first click the "Upload a File" button below the text box. Select the image you want from your computer.
After that, you'll have a thumbnail of the uploaded picture below the text box. You need to click the "Thumbnail" or "Full Image" button to insert it to your post.
This is drag and drop from within whichever version of the editor starts up when I first begin a post
If I now edit the post by pressing the Edit button the target for the drop goes red (well more pink really) and says "Uploads are not available." Is this what you are seeing? And is this in the context of initial data entry or trying to edit a post?
When I get the pink "not available" I choose the More Options... button below the entry window. I'm choosing that now.
and drag and drop now works. This smells like a programming/configuration error to me, but what do I know. I've only got a PhD and and 50 years of programming behind me, but no specific experience with the software system DFO uses.
I should also point out that there used to be different versions of the data entry box which comes up when you make a post. After the "upgrade" towards the end of last year things changed and I could no longer work out which version of the data entry box was the default, how to change it, and how to see which one was currently being used. It is also possible that if you are using a tablet vs a computer vs a phone the behavior is quite different.