A fellow bloggers work around works!!!!!
If you are having issues with posting photos
on Blogger try this from Vero:
"I don't think so these people don't have time to spare for the little bloggers like us.. I found something out which helped me to solve at least a small part piece of the puzzle. I noticed, every photo of mine that was rejected as too big was shot with the the zoom. I went ahead and cropped the picture via the windows snipping tool. The cropped pictures are all accepted, but when I tried to use the original one... it was again rejected. So far I am good now and able to add the cropped pictures. It must have something to do with the MB of the original. Not sure if that is of help for anyone"
and if you'd like to read all about it go here: