Pretty sure it's broken (not an answer, but it's not just you).

From what I've seen, uploading doesn't work yet and embedding from an outside url is spotty but*can* work. Not sure what the proper incantation/sacrifice combo is for it, unfortunately.

For the first method make sure you don't mess up the link section at the bottom! The spaces have to be exactly like they are generated and there always have to be at least one empty line between your text and the link section. I never had problems using external images. I never tried < img src="" /> yet but i guess it should work as well...

Test1 23

Well, as you can see I tried one more time but it didn't worked either... Feel free to edit the page to see if I did a mistake (and if I did, feel free to taunt me as-well :))

The point is you didn't use an URL to an image. The url you're using leads to a webpage.

The URL you're using:
https://picasaweb.google.com/111582834588121603172/UnityHelpForTransparentObjectsSorting#5628979854712057138

The URL to the image inside this webpage which you should use:
https://lh6.googleusercontent.com/-FXvbscVgvTw/Th4nWq_xLTI/AAAAAAAAAA8/z_vyFFxAl6U/schema.png

At the moment i use only my public folder in my dropbox. It's the only (free) storage that doesn't get deleted after a few month ;) If you have dropbox just copy the image (or whatever) into the public folder, right-click it and select "copy public link" in the dropbox menu.

http://www.dropbox.com/help/16