I use tinypic to upload my photos, but Photobucket.com is a good alternative.
You need to put the image in your signature like this:
Code:
[img] direct link to picture[/img]
or cop and paste the Forums/message board link that the image host provides. I haven't tried this with the AU image host so I don't know if it works with that too :/
I think signatures have to be smaller than 750 pixels wide as that's the maximum image size for the forum. Most peoples signature banners are 700 x 150 or 600 x 200
hope that helps