posts have unwanted extention

Actually, there’s two things going on here.

1. http://damonv.com/?p=44 is your post’s URL, not an “unwanted extention.” If you want it to look a little bit nicer, set your permalinks at Settings/Permalinks in your admin panel.

http://codex.ww.wp.xz.cn/Using_Permalinks

2. Your theme is set to show a filtered except on the front page, rather than full content, which is why you see a bunch of code instead of your image.

It’s hard to say without seeing a copy of the theme, but this may be controlled by a theme setting. If not, go to Appearance/Editor in your admin panel, look through the templates for the_excerpt and replace it with the_content .