I missed a step or two. First you have to have a photo stored on your computer hard drive. I do this by right clicking on the photo, hitting "Save this..." and giving the photo a name that I will remember.
Let me know if this isn't enough. Ask me some questions and I try to give an answer.
I then click on an album, click on "Upload Photos", then on "Add Files", then on browse. Your computer photos should then appear and you click on the photo you want to upload and away you go.