Hi,
Please follow the below steps:
•Highlight the image — just the image — with your mouse.
•Press Ctrl-C (Windows, Linux) or Command-C (Mac).
•Position the cursor where you want the image to show up in an email you are composing in Yahoo! Mail.
•Make sure you have enabled the Yahoo! Mail rich text editor.
•Hit Ctrl-V (Windows and Linux) or Command-V (Mac) to paste the image.
•If you use an image uploaded to a free image hosting service:
•Click on the image.
•Link the image to the image's page address at the free image hosting service (something resembling "
http://img.imageshack.us/my.php?image=example.jpg" if you use ImageShack, for example).
•Continue editing (and adding more images).
•Finally, send your Yahoo! Mail message as usual.
Hope this works, because it has worked for me.