cannot display new content
are you inserting "inline images" into your content type body-field (1) or using an image field at your content type (2)?

1) Inline images are inserted with an  tag which is stripped out by the standard text formatter (filtered html). Either use the "full html" formatter or (better) make a new text formatter which includes  tags for allowed html tags. Full html is normally below body field at the content edit form.
To add a text formatter (or edit filtered html) go to admin/config/content/formats/filtered_html and add the  tag (including the bracers) into the allowed html tags field.

2) If you are using an image field try to change the image field formatter to "image" and set format settings to a image style like "medium".

Greetings, krueschi