I remember when you had to edit this in, before you had to make like a siteimg tag.
That was cool, but this is really awesome.
Depending on your site content (let's use the example of flowers here)
You site is about different flowers, growing them etc.
So in your photo album you can upload pictures of different flowers.
When you set up your news mod, you can upload your own pictures.
Try using a picture of a flower. Make it small.
Then you can pick this flower for your news post.
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I usually just have one main news i call front page.
Pretty simple. If i want a news post to appear on the front page i pick this.
Then in your news post you can use the img tag to post the picture from the album. if you use the image button in the advanced BBcode Box (it's next to the red F for flash) you can type the number of the picture in the album.
This works out really well for instance for a game site. You can upload the logo of the game right into the album, and use the picture in your news post.
I'm pretty sure this works also in the knowledge base.
Try it out. Post back if you have any problems or comments so that we can all learn from each other.