There seems to be a bug in Joomla 2.5.1 – 2.5.4 (this is the last version I tested) where when you use the JFU button extension all images are inserted at the beginning and not at the cursor position. This also happens when you use the default “image” button from Joomla. there is already a bug opened for Joomla and I hope this will be fixed soon. Please use e.g. Chrome as there this seems to work fine till now.