Assuming photos have been uploaded to picassaweb.
Click thumbnail of photo to be linked. This opens the photo to display a larger image.
under Tags is a 'Link to this Photo' link, click this
Select Size > drop down list, make selection. one of the mediums should be good.
2 Check Boxes under this drop down, make selection(s) I click both. ***Edit. Seems only the 'Image only (no link)' check box is working.
go up to 'Embed Image' and click, this selects the whole line and turns it blue.
Right click, > Copy
Go to FFF and click the Insert Image icon
Past in the copied url. It will be inside of 2 IMG tags.
Click the Preview button to test.
It is not the most intuitive layout and things are not in the best order.
hope that helps and feel free to give me a shout if needed.