I just tried it on my Apple and it works just fine, although it's slow.
Here's what I did:
1. Click on the Upload Inline image(s) icon. A new screen will appear.
2. Click the Choose File button in the new screen and a browser screen will appear.
3. Select ONE file you want to upload and click the Choose button. This will put you back into the previous screen and the name of the selected file will appear next to the Choose File button.
4. Click the Add File button. The selected file will appear to the left of the screen, eventually. It may take a while based on your connection speed, CTF traffic, etc. NOTE: you can only add 1 file at a time.
5. Repeat steps 3 and 4 for each additional file you want to add.
6. Click on the Done Adding Files button after you've added all the files you want and the added files will appear in the dialog box, wrapped in all sorts of technical code.
I hope this helps.
PS. What OS and browser are you using? I'm using OS X 10.6.7 and Safari 5.0.5