Attached an image and here are the steps:
1. Open a page with HTML Editor on it
2. Select the IMAGE icon
3. First box it opens is IMAGE PROPERTIES
4. First TAB open is IMAGE INFO
5. Select URL ----> BROWSE SERVER
6. FILE MANAGER opens
7. Left hand side FILE UPLOAD select the drop down box and instead of FILE UPLOAD Select COPY from URL.
From there you will get errors that will stop it working in IE8 and also 7 I think.
In the other browsers ie FF/Opera/Chrome other problems occur.
Hope this helps below is SS.