You are one small step away from getting it right. After you read this, click on "Edit" and then notice that right after ,, the "http://" is repeated. That's because it's already in the line you pasted in to insert the link. You have to select that and overwrite it when you paste the link. Delete one of those "http://"s and your image should appear.
Delete the second one ([B]http//[/B]). It lacks the colon, and wouldn't work anyway. When you're finished, it should look like this inside the IMG tags:
[url]http://i260.photobucket.com/albums/ii36/hkknives/000_0306.jpg[/url], not this [url]http://[B]http//[/url][/B]i260.photobucket.com/albums/ii36/hkknives/000_0306.jpg