Okay, i just uploaded my images and it works. I keep all my images in the "images" folder. Here's what i did.
1. I went into the graphic library page from my site central panel.
2. There i created a new folder called "images". Just click on new folder in Graphic Manager.
3. I uploaded my image using the upload tool on the Graphic Library page. For some reason the image was uploaded on the root directory even thou i had selected "images" folder before uploading. But if you don't see the image that you just uploaded in your image folder, you can simply do the following.
4. Just drag the image you uploaded to your images folder. The instruction on how to do that are on top of the graphic manager.
"...To move an image into a folder, click on its image icon icon and then drag into any folder. Create folders as needed."
That's it! you're done

Now, in your html just point your image src to the images folder like this
HTML Code:
<img src="/images/myimage.jpg">