Do you know how to access your FTP ? If so when you 1st log into your FTP and connect to your server there will be a folder called httpdocs. Everything in there is considered your "root folder.
So when you log into your server using your FTP then you want httpdocs once inside this folder you want your skin1 then images folder. Upload any images ( not including product pics) to this folder. Then use the editor and inset picture and set it to
http://www.example.com/skin1/images/example.jpg
Hope this helps.