To upload an image while you are editing content with Drupal 7 you need these 3 modules:
- WYSIWYG 7.x-2.0
- IMCE Wysiwyg API bridge 7.x-1.x-dev
- IMCE 7.x-1.1
Then install an editor like CKeditor, I'm using TynyMCE
Then goto: admin/config/content/wysiwyg/profile/full_html/edit
And for plugins check IMCE
That's it!