Simply click this link: http://thawa.net/gallery/
create an account, and check your e-mail to set a password.
and start uploading.
There's no real limit to how much you can upload, I doubt you'll all be using more than 6gb's of space for pics

I've only got a few rules, nothing illegal, don't try to mess a bunch of stuff up, and if you have a suggestion please post it, I'll be happy to help however.
As far as the images, when you create an account it will create an album with a description you can set, then you can upload directly from your harddrive or from another website into your album. When you go to open your album the pictures will be thumbnail-sized like so:

when you click the picture it will be displayed at about half size like so:

and when you click that picture it will be displayed at full size like so:

To get the direct link to the picture simply right click on the picture, and select properties (if using internet explorer), then copy what it says next to Address and that's the link. If you're using mozilla or something, right-click on the picture, and select Copy Image Location. I dunno about other web browsers, but if you cant figure it out just post and I'm sure someone will be able to help.
If you have anymore questions or problems please just post here.
EDIT: Thanks to vrg3 there is now text directly below the image that will post the image of the thumbnail that is clickable to fullsize like this:
Click for full size

simply copy all the text in the box as it says, and paste it into your post.