To help me better understand the issue, can you please post screen shoots showing your HTML Editor settings and the image upload feature not active, this may help me understand what is wrong.
Your friends over here at WebAssist! These Dreamweaver extensions will assist you in building unlimited, custom websites.
These out-of-the-box solutions provide you proven, tested applications that can be up and running now. Build a store, a gallery, or a web-based email solution.