I should add, the page to which I'm adding the Editor uses a master page... hope that doesn't complicate the matter?

 

Also, following is strange:

I click on "Insert image"

I click on "Upload" button

I select my file

The next step asks me to enter username/password to connect to my server (local host for now, just testing this)....

 

strange... I'm sure it's a config issue... i just don't know what it is...

 

You help is much appreciated.