You were probably linking to the one on your hard drive. You could see it, but nobody else could.
Good point. It is always a good idea to hit the "refresh" button after you preview your post when it includes linked images. If you don't, then you may see the post correctly because the image is cached in your browser, but if the source doesn't permit hot linking, then everybody else will either see a red x or some nasty snarky comment by the host site.