Okular wrote:When I select “Insert Image” on the content tab, it wants to insert a HTTP path? But I want to embed the image directly in the page
It just says "http://" as default, as it means it's there you would insert the PATH to the image that you want to embed into the page. The path could start with "http://", but you would normally only use that if you are embedding an image from a different website. If you are inserting an image from your own website, you would normally add the "/root/relative/path.jpg".

Perhaps more importantly, if you upload the images you want to use into the dir, they will be selectable from the "select image" dropdown menu. See screenshot:
Okular wrote:and have the text flow around it
It probably won't by default work exactly like this. If you want for example text on right and image on left, you might need to use a columns grid (available from the next "magic wand" button to the right of "insert image").