So it took me a whole day, literally an entire day to figure this out but I've got working pictures again.
Here's what I learned. When you run out space for pics on your blog you don't have to buy more space..the simple solution is to upload your images into a free image hosting site like imageshack.us or photobucket.
Use the same little picture box in blogger to add images, only add it using a url (which the site provides--if using imageshack click on image details button and the link to use is the second one called direct link to share image)
Also on imageshack when you upload an image it gives you the option of rezising it. I've been doing the 600 x 800 (or something like that)for larger pics.
Also, and this is key.
You must change your blogger template to say....minima stretch, which allows for bigger pics.
I'm very humbled by my ignorance and the time it took me to figure this out. Ask me questions if you need help.◦