First of all, make sure you are using the graphical editor, otherwise known as "WYSYWIG" (What You See Is What You Get).
If above the typing area you see a row of icons - you are all set:
If not - click the "Graphical Editor" link just below the text area:
Now if you just want to post a link, just select the text you want to become a hyperlink and click the "Insert a Hyperlink" button on the toolbar:

and type in the actual link in the presented box:
After clicking "OK" the text you selected will turn blue and will be underlined, meaning that it has become a hyperlink.
Now if you wanted to insert an image - it gets a bit trickier. You see in order for other folks to be able to see your image, it needs to be placed somewhere on the Internet. If you try to post an image that sits on your computer - only you will be able to see it, while everyone else will see a red box. So the first step is to get your image "hosted" somewhere. I suggest a site called
Photobucket for their ease of use. After you create an account you will be able to upload your images there and reference them on any message board, including this one.
Photobucket makes it easy to post images. Log into your account and you will be presented with a screen that you can use to upload your pictures:
Just click the "Browse..." button, select your picture from your hard drive, give it a description and click "Submit". That's all there is to it. Once that is done, under the image you will see three boxes containing a link to it in different formats:
For the MxO boards you will need the URL format, so copy whatever is in the "Url" box and come back to your post. Now click the "Insert an Image" button

on the toolbar and in the presented box paste whatever you copied in the previous step and click "OK"
Your image will immediately show up in the message body. Now click "Submit Post" and voila!