Hi Jane
Insert > Picture to insert a picture. Insert > Reference > Caption (or,
in earlier versions of Word, Insert > Caption) to insert a caption.
The one really important thing about pictures is that they can float
over the text layer (so you can drag them around), or they can be
in-line (so they behave like one very big character. See
The draw layer: a metaphysical space
http://www.mvps.org/word/FAQs/DrwGrphcs/DrawLayer.htm
If you want text to wrap around your picture, and a caption under (or
above) the picture, the best thing to do is to group them in a frame.
View > Toolbars and click Forms. Insert your picture. Insert your
caption. Select both and click the Insert Frame button on the Forms
toolbar. You can then position the Frame wherever you want it.
Hope this helps.
Shauna Kelly. Microsoft MVP.
http://www.shaunakelly.com/word