TinyIMCE not working: looking for image files
I believe the image component of TinyMCE is a licensed product you have to buy, see http://www.tinymce.com/download/download.php at bottom. You might want to try IMCE module http://drupal.org/project/imce which is free and integrates nicely with the WYSIWIG interface. If you do decide to go that route, afteryou install IMCE make sure you turn on the check box for IMCE in the TinyMCE options inside the WYSIWIG Admin Tab in Admin -> Configuration. Works like a charm for me.