The images are NOT hosted on your webspace. This code is using the free (no registration) hoster Imageshacks (http://imageshack.us).

However, Imageshacks (http://imageshack.us) does supply a piece of code which enables Image Uploading in your forum. Since iframe will be used there is not way (at least for me) to create an installer or something like this.

Please see screenshot as example.

These instructions will help you to install 'ImageShack on your Site' into the reply and post-new-thread sections of your vBulletin message board, thus giving your visitors the ability to upload images directly. After upload, they may paste the images directly into their post box.

1. Log into your admin cp, and click on Styles and Templates, then Style Manager.
2. For the theme (or themes) that you would like to add the iframe to, select in the drop down box "Edit Templates". You should see a whole list of template groups now.
3. Click the "[« »]" on the "New Posting Templates".
4. To add the box to the reply page, click edit on the bullet point that says "newreply".
5. Search for this code:

<fieldset class="fieldset"><legend>$vbphrase[miscellaneous_options]</legend>
<div style="padding:$stylevar[formspacer]px"><if condition="$bbuserinfo['signature'] != ''"><div>
<label for="cb_signature"><input type="checkbox" name="signature" value="1" id="cb_signature"
tabindex="1" $checked[signature] />$vbphrase[show_your_signature]</label></div></if><div>
<label for="cb_parseurl"><input type="checkbox" name="parseurl" value="1" id="cb_parseurl"
tabindex="1" $checked[parseurl] />
$vbphrase[automatically_parse_links_in_text]</label></div>
disablesmiliesoption</div></fieldset>


6. Paste the iframe code DIRECTLY AFTER the instance mentioned above.

<fieldset class="fieldset"><legend>Upload your images to ImageShack</legend>
<div style="padding:$stylevar[formspacer]px">
<iframe src="http://imageshack.us/iframe.php?txtcolor=111111" scrolling="no" allowtransparency="true" frameborder="0" width="280" height="70"> You must
have an iframe-compatable browser to view the ImageShack.us upload form.</iframe></div></fieldset>


7. Click Save.
8. To add the iframe in the new thread page, click edit on "newthread".
9. Repeat steps 5, 6, and 7.
10. Login to your message board as a regular user. Either click "Post New Thread" or reply to an existing thread in order to test out your new Image Hosting Service!

Click for Original from Imageshacks (http://reg.imageshack.us/vb.php)

There is no credit for as I only tested it successfully on my board which is 3.5 RC2 but this is VERY usefull.