Download Windows Live Writer from here.
Ensure you perform a ‘custom install’
Choose only ‘Live Writer’ (Untick everything else)
Once live writer is installed, configure it to use your blog (username / password / blog address).
Download and install the Instant Imageshack plug-in from here.
Once installed it places a plug-in in the ‘Insert’ tab called ‘Instant Imageshack’.
Click the Plug-in to select a photo from your PC, choose a size.
It will be uploaded to imageshack.us and linked in your blog.
It only works with .JPG files.