The problem I am experiencing is a bit similar. When I’m writing a post and want to add an image to it, I upload it from my computer, it sets in the media library, but cannot add it to the post.
When the pop up window [media library] opens, if I clcik on SHOW the image I choose, nothing happens.
So, to be able and add a picture I do this > right click the media library > right click on photo I want to add > right click properties > highlight the url copy it and add the url location of the photo into the post. It appears.
But this is a headacke. It must be an easy way to add a photo, just like tou do in wordpress.com
Any help or comments are welcomed {I have just started my new privately hosted blogs 2.5 updated at ww.wp.xz.cn and still missing my old wordpress.com days]