The first thing is you have to have the image you want to display on the forum, already stored/posted on a webserver somewhere. Your own website, our DMC gallery(which you need to request an account for if you want it), or other free services like
www.photobucket.com or
www.flickr.com.
Once you have the picture posted on the web, then its easy. Flickr and Photobucket both display the direct path to use on this type of forum when your viewing images posted on there sites, so you just copy/paste that path/url as shown below.
(Pasted from the phpBB Userguide)
Adding an image to a post
phpBB BBCode incorporates a tag for including images in your posts. Two very important things to remember when using this tag are: many users do not appreciate lots of images being shown in posts and secondly the image you display must already be available on the internet (it cannot exist only on your computer for example, unless you run a webserver!). To display an image you must surround the URL pointing to the image with [img][/img] tags. For example:
[img]http://www.google.com/intl/en_ALL/images/logo.gif[/img]