The image url is the web location of the file. In otherwords, the weblink that takes you to the image of the picture. If you use photobucket to host your images online, then you simply copy and paste the 4th link they provide for you.
This, for example, is the url to the pic of me standing in front of the Elefant at Aberdeen.
http://www.espins.info/PICT0074.JPG
In order for it to show up as an image, I click the little button on the message tool bar that looks like a tree, and paste that link into the box, then click insert.