kavanaru...you've completed step 1 and step 2 but you haven't completed step 3...
Grab the URL for your photo page on flickr, highlight/select the image text in your message body, click the button and paste the photo page URL into the dialogue box
The instruction was there before...but now it has the image...
Like they say...a picture is worth a 1000 words!
To save a couple seconds you can just right click on the flickr image and copy the image URL/location...instead of having to retrieve it from the All Sizes page. Not sure if right clicking on an image to copy its URL works in mac though.