I've done a little research and found a couple of sites that say they offer free image hosting with linking. I have not tried any of these sites so be sure to read all of the info on each site. Be aware of size limitations, etc.
Site 1 - It appears that all images are uploaded to one large directory.
http://titansfan098.com/
Thank you for visiting titansfan098.com
This website was created for the sole purpose of providing free and reliable hosting of images. Our easy-to-use uploader allows you to upload an unlimited amount of pictures, at up to 2mb per picture. Best of all, it's 100% free, and there is no sign-up required! To get started, click the link to the left.
Site 2 - Free but can only upload 500kb - bandwidth is unlimited but monitored, offer's more storage but you must pay.
http://ebozz.ashst.com/
Site 3 - This one looks pretty good
[i]
http://photobucket.com/
Photobucket.com is a leading image hosting company for ebay, live journals, message boards, online auctions and online photo albums. Photobucket is reliable, fast and very simple to use. With more digital cameras and photo editors being used everyday, users need a place to store and display images online. You can easily upload, link, categorize, add titles to images and add more albums as needed. Your pictures are safe and will not be deleted. Best of all, direct linking is allowed. Currently this site is free and has minimal limitations, however donations are appreciated![i]
Here's an option I found that someone suggested:
I use my Yahoo! briefcase, which is part of my free Yahoo! account. I just set up a public folder, save my images to it, then use the links to those images in my auctions
Of course, as I mentioned before, check with you ISP and see if you have any hard drive space available for storage. RoadRunner gives it's users 5 mb of drive space for a homepage.
As I said, I have not tried any of these sites, I'm only providing information.