A pretty confusing label. A "book" is just a section of OlyBlog like this one you're looking at; on OlyBlog, "Books" are collections of posts set up so other people can add entries to the collection, edit what's there, move things around, etc.
OlyBlog inherited this confusing term from Drupal, the open source content management software that keeps track of and displays all the content for the blog.
To get a picture into your post, you can click the little tree picture icon in the toolbar of the rich text editor. That gets you a little dialog window that says "Insert/edit image" at the top, and in the top right corner of that there's an icon that looks very vaguely like a little computer window with six tiny blobs of color that are supposed to be images. Click on that icon, and it gives you a second window that says "File Browser" at the top. That window has a button at the top left labeled Upload. Click that to open yet another window where you click the "Browse" button to use the regular file dialog system on your computer to select the image file you want by clicking on it and clicking Open to choose it. Then you click the Upload button at the bottom of that window (right next to the Browse button) to actually ship the image to the blog. (There's a size limit, but it's large enough so I don't normally think about it. It's nice if your image is 600 pixels wide or less so it fits in the column, but the software will now resize big images automatically.)
The image you uploaded should appear in a list showing the files in your personal upload directory, and then you just click on the filename that you want and click "Insert" at the top of the "Insert/edit" window.
Fortunately, it's easier to do than to describe...
I try to remember to type anything that might be long or complicated into a simple word processor and then paste it into the Body window when I want to post, just so I don't have to start over if I go to some other page and lose what I was typing by accident. By simple, I mean something like WordPad or Text-Edit; if the word processor's set to use curvy quotation marks and asterisks instead of simple straight ones, for example, they'll show up as weird symbols on some people's machines.
Every Body window, where you can type what you actually want to say, has a link underneath labeled "enable rich text". If you click on that, you get a little menu with buttons above the window; they let you format what you're writing by adding italics, creating links, inserting pictures, and so on. If you pause the cursor above each button, a little label that tells you what it does shows up. Usually, you use the button by selecting some piece of text and then clicking the button to format it in one way or another. If this sounds good to you, I'd suggest enabling rich text, typing in a few lines of "The quick fox jumped over the lazy dog," and just fooling around trying out buttons and getting a sense of what they do. It will be more fun than trying to learn it while you're actually trying to say things too.
Enabling rich text lets you do a number of things just by clicking buttons, which is nice, but it doesn't always do what you want it to, which is not nice. (As far as I know, for example, you can only get single spacing in your rich text posts by holding down another key - Shift on my Mac - while you hit the return key.) And the rich text editor adds a lot of hypertext markup language (HTML) tags to your text which look like gobbledygook to you if you're just getting started blogging and you try to edit the text afterwards.
This book offers technical advice about how to do things on OlyBlog. It's a collaborative project; if you've got questions you'd like answered (or if you need help using the blog), please email Thad Curtz. If you know how to do something that you think other people might like to do, feel free to add a page about that to this book. (Unfortunately, comments on a book page like this or new child pages added to this book with the link below do not seem to show up in the Recent Posts list; you need to do a separate post announcing them if you want people to know about them ...
If you think you can improve an advice page that's already been written, please feel free to add your comments and advice. Please don't just change what somebody else has said, at least not for now; let's see how just adding comments, suggestions and corrections works for a while.