Me and my images

I installed Drupal and would like to use images in my posts. But stories that I created with inline images does not show. I only saw my text. I repeated my fresh install 3 times with identical results. I have outlined my detail steps so that you guys can figured what I have done wrong:

- I installed drupal-4.7.0-rc4.tar.gz followed by:
image-cvs.tar.gz
img_assist-cvs.tar.gz
(All are fresh install)

- I went into administer/modules and activated image and img_assist modules.

- I didn't check anything for 'image' and 'img_assist' under 'access control' since I only want the admin to be able to use img_assist and that I only want visitors to view thumbnails, not the actual image.

- under 'input formats', I noticed that 'Filtered HTML' is already checked and I clicked on 'configure'. I checked 'Inline images' so that I can add images to my posts with img_assist. I clicked on 'Save configuration' button

- I quickly create an image content. Gave it a title, choosed an image and hit the 'Submit' button. I am notifed with 'Your image was created' and I can see my image being displayed by Drupal.

- Then I clicked on 'create content' and choosed 'story'

- The title is 'Testing 123'. I clicked on the img_assist icon to add image and I choosed my previously uploaded image. Upon clicking the 'Insert' button, I got this in my textarea:

This is Drupal logo: <span class="inline left"><img src="//arl.net.my/files/images/drupal.org_0.thumbnail.png" alt="Drupal logo" title="Drupal logo" class="image thumbnail" height="64" width="200"><span class="caption" style="width: 198px;"><strong>Drupal logo</strong></span></span>

- I clicked on 'Input format' to make sure I can add images and I saw these lines:

    * Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd>
    * Lines and paragraphs break automatically.
    * Images can be added to this post.

- I hit 'Submit' and when the page refreshed, I can only see 'This is Drupal logo: ' and there is no image

- I created another story and use the same image but this time I used 'Filter Tag' instead of 'HTML code' and yes, this time I can see that image.

What have I done wrong? Please advise.