When you are in the link view and browse the server you should make sure to select file from the select list at the top. This should allow you to upload any of the allowed file type:
'7z', 'aiff', 'asf', 'avi', 'bmp', 'csv', 'doc', 'fla', 'flv', 'gif', 'gz', 'gzip', 'jpeg', 'jpg', 'mid', 'mov', 'mp3', 'mp4', 'mpc', 'mpeg', 'mpg', 'ods', 'odt', 'pdf', 'png', 'ppt', 'pxd', 'qt', 'ram', 'rar', 'rm', 'rmi', 'rmvb', 'rtf', 'sdc', 'sitd', 'swf', 'sxc', 'sxw', 'tar', 'tgz', 'tif', 'tiff', 'txt', 'vsd', 'wav', 'wma', 'wmv', 'xls', 'xml', 'zip'
If the file type you are trying to upload is not in this list it can be added so you can upload that type of file.
Do you have anything specified in your globals file for the relative images path? If so do you see the contents of this directory when you select image as the type at the top of this browse window? When I change the list to file type I can see the root of my site and all of the files and folders within it, what do you see when you have files selected?