I’m sure a moderator can answer more clearly, but I run a WP site elsewhere which exhibits that symptom when uploading a file that’s too big.
Your average smartphone or camera generates a file that is about 4x bigger than you really need for websites. Try reducing the image size (irfanview is tiny and free if you don’t have image software: http://www.irfanview.com ) to something like 1024px or 800px wide and try the upload again.
links depend on whether the site you’re linking to allows hotlinks. If they do not the preview will not generate. In some browsers you can click “cancel” and it will let you go back to the text box. Also if you put a link in the text box it will show up as a link; it just won’t have a preview.