Before I dive into the next installment, I want to point out a resource that I use a ton and give you a couple tips that might make your life easier-
If ever I need to copy some code or test something I've written, I do it here. They have tons of helpful lessons to help you puzzle through if you're clueless. Also, they have test pages for most of their lessons, which I use to test code I've written. Just clear out the code in the box on the left, paste in your code and click the button to make sure you've written something that actually works. There's probably a better method for this but I like it.
Make a Test Blog
I have two test blogs. Create a new blog and give it the kind of URL that no one will ever find without being directed to it. Like AnnaSmithsTestBlog947.blogspot.com or whatever. Make sure your settings are such that it isn't listed on your Blogger profile and is not Google searchable. Now you have your own private little space that you are free to completely screw up without breaking your real blog.
You can make it private if you so choose but I prefer not to. As long as they're public I can send the link to blog design clients (or Janssen) for opinions, feedback and approval.
A test blog is also a great place to host your images.
Host Images Within Blogger
Create a new blog post. I usually title it something like Blog Images [DO NOT DELETE].
Insert your image(s).
A quick aside- save yourself an HTML step and create your images as the size you want them to be. You COULD create them larger and then write the HTML to resize them but that's a pain and sometimes in Blogger that makes the images go fuzzy for some reason.
The image below is my navigation bar from my last blog design. I created it to fit my sidebar. Make sure you click "original size" when you upload.
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After you've clicked "original size", click over to the HTML tab.
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Look for src="http://blahblah". That link is your hosted image. You don't even need to publish the post. You can keep it as a draft. Keep this one in mind because we'll be using it later!