On a plain cairo install : I edit with the wysiwyg editor (last version from develop), I upload a picture : I see it in the page. I save.
Then I see that the picture is there in view mode. I re-edit with the wysiwyg. I only see a small box with the picture filename inside. In the HTML view, the src attribute of the img tag is : "https://mail.twiki.org/pub/Bugs/Item1441/PICT0036.jpg"
Apparently it is not expanded.... tested on CAIRO.
Sorry, Michel, I can't reproduce this. I just installed the plugin (SVN 8388) on a fresh-out-of-the-box Cairo release, and it worked perfectly.
Is it possible that you have another plugin in the way?