Hey Yubi,

I am really sorry for the delay of this reply as it is a weekend for us here. Please find my response to your inquiries below:

1. Referring to attached, Farah is only a normal registered user, why is she allowed to add "Module" and "Article" in the front end? Kindly advise where to set this.

These are actually "editor buttons" and you can control the access through Joomla's plugin manager. Go to the plugin manager at the back end of Joomla and change the "Access" for each of these editor-xtd plugins.

2. How do we enable users to upload pictures to be embedded in blogpost directly, and not just a picture link?

Take a look at my screen shot here, http://screencast.com/t/3ziN2OXSTN