The bad news is... yes, you have to use HTML tags. The good news is... MT does most of the work for you.
If you select 'upload image' from your blogs main menu, you'll be presented with a dialogue allowing you to browse to the image and upload it. After it's uploaded you can tell it to use the image in a new entry and will be presented with a blank entry containing a link to your image (pop-up or embedded).
Something like:
CODE
<img alt="yourimage.jpg" src="http://www.yourdomain.com/mt/archives/yourimage.jpg" width="150" height="75" border="0" />
By adding , align="left", to the img tag you can force your text to wrap around the image. You can also add margins and/or a border to the image.
If you have NetPBM or ImageMagick on the server you will also be able to create a smaller (thumbnail) image and link it to the larger version.