I think eventually I will get drag and drop working properly on Chrome, but in the meantime I have added an extra functionality to let you work around this problem:
Starting now when you are editing an article or blog entry, when you see the images on the right side, directly above each image is a [pic] tag that is populated with the name of the image below the tag.
You can copy and paste just the tag into your post body and when you save your changes and preview it, you'll see that the tag is replaced by a clickable version of the photo.
