I can't "copy image location": that's not an option I'm given. I can only "copy". There is an option to "copy shortcut" but it's not clickable. Trying again, this time using URL instead of Forum Code:
[img]http://www.freesmileys.org[/img]

Well, that didn't work. Back to Forum Code, this time using the link button and not the image insert button:
[url=][/url]

Nope--still the box. Guess it's time to give up.