Sometimes it is up, sometimes it is not, verified on three different machines. I also did a test post, and it works fine. The problem is with the place your picture is stored at. they may be doing maintenance or something.
Hmm. I have been doing some test posts. From what I can see, as long as the picture host allows "hotlinking" it should work.
That being said, sometimes huge pictures do not work, and that is not a real bad thing. Try using a slightly smaller version of the image if you have that option.