On Wordpress 2.8.6 when creating a blog item, if you try to insert a photo into a post, there is a javascript error in wp-includes\js\tinymce\wp-tinymce.php. I could still upload photos, just not insert them into the post through the editor.
I didn't look too much into it, but disabling vBridge made it work again, and installing CKEditor while vBridge was enabled also made it work.
Instead of trying to fix the problem, I've been using vBridge with "Dean's FCKEditor" plugin for Wordpress...as it has more features than TinyMCE anyway.
http://wordpress.org/extend/plugins/...dpress-plugin/