I have experienced the same error, for both trying the embed method and the image attach message. On subsequent tries, on the very same images, the upload worked without error. Not sure what's causing the error.
I made about 25 screen captures of issues I've been experiencing, including this error, hadn't saved and named the screen captures, was out all day yesterday, then this morning my computer got auto-updates and forced a reboot, so lost all the screen caps, will have to makes them all over again, will save-as-I-go this time around.
Test image upload:
Notice a couple things here, when I first went to "Image Attachments", and browsed to the image and selected it, it did not present me with the "Alternate Text" field, the text that shows up when mousing over the image. One must hit the Upload button to get that option, if one simply specifies the image then hits Save to post the message, that option will not be presented. The field does become available is I Edit the message after posting it initially. Weird thing, by default the "mouse-over-the-image" text becomes the first few words at the start of the message... mouse over this image to see what I mean, it repeats the first 5 words of my message.
The fix for that is either to add in some meaningful text, or in the "Alternate Text" field, as at least one blank space, so that nothing shows up.
Another thing I notice is that it doesn't keep my preference to spellcheck as I type. There are two spellcheck buttons, the one on the left invokes a spellcheck. The spellcheck button on the right is preferred, "Spell Check as you Type". The other options under that pulldown menu are grayed out. I have set this SCAYT preference before, but it doesn't stick, must select it again each time creating a message.
3 words that are not in spellcheck, I will add them to my dictionary: Allium Campanula Eriogonum
Upon re-Editing this message, SCAYT is off again. Wonder is there is a way to save my preference to ALWAYS have it on. So, I re-select SCAYT for the edit, now the Options in "Spell Check as you Type" are activated, and I can save my spellchecker to my own dictionary. Hopefully, this would work for non-Admins as well.