Are you uploading the images from your hard drive or a photo site?
I believe the photo site pictures can be larger.
Here is a test with the same picture.
Photo site:
I use photobuckett and I edit it to medium size. and after I checked the box I scrolled down to click the get the html and then Highlighted the bottom box and then hit control and c then went to ford barn and hit post reply and clicked on the box on the tool bar that looks like a mountian in a square and when the picture box came up I hit control v then hit ok and it then show the picture in the post box. I hope this makes sense.