Jean, I think you did what I kept doing: forgot the ".jpg" extension on your hyperlink.Go into edit mode on the entry with the failed photo link and see if that isn't the problem.If you typically write in "compose" mode, you'll want to tab to "html" mode.
Saw your question on Blogger user support. I don't know the answer, but I had to come see your knitting blog. Love the baby surprise sweater. Nice blog. Hope you get a good answer to your picture problem.