Are you uploading an attachment using the Attach Files
icon for images?
Right now it appears that only works for Docs. spreadsheets, etc. Recently there was an update to Attachment Improvements feature and that likely screwed it up, and we'll have to wait for an update fix.
The workaround in the meantime is to use the "insert image"
icon instead for attaching images to posts. Click on that and then click on the drop image (or click here) icon and navigate to the pic you want to attach.