About the post editing ability, I think that there is a time limit during which users can edit posts...if a post gets over 1 day old then it can't be edited anymore by the original poster.
There is no longer a button for images either
Strange, I can still see it next to the "Link" and "Youtube" buttons in the toolbar...
Or did you mean the upload button in the bottom? I'm not sure but it could be that the upload button might disappear if your post already contains the maximum number of uploads (5 at the time you tried it).
Also, to make uploaded images appear in the post, there should be a "Insert into post" text link visible next to the upload, clicking it makes the image appear in the post.
But anyways, I have now increased the image upload amount to maximum, which is 10.
And also I changed your usergroup to "Checked", which has better permissions than "User"; try if you can now edit your original post. :)