You probably know this already, but to open a screenshot (PICT) file in AppleWorks, you can select "Open" from the file menu, then change "File Format" to "All Available", and browse for the screenshot file. The image will automatically open in the Draw environment.
The maximum size for an attachment is 100 kb, and the maximum for uploading is 3 or 10 MB (don't recall which). To give you an idea how large an image that permits, the above jpeg with the marked FP location is 88 kb. If you use AppleWorks 6 to save as (filetype) JPEG, there will be an option to select a target size and quality, but I use the default settings (unchecked target size, medium quality). To reduce the file size of the JPEG it is best to crop or downsize the image.
To crop the image you can ungroup the picture (under the "Arrange" menu), double click on the image, select the desired portion using the rectangle selection tool (dotted rectangle in the painting tools), then copy and paste the selected portion, and delete the unwanted portions of the image.
One more thing. When uploading any file it is best to use a lower case extension (.jpg/.sav instead of .JPG/.SAV) because the system is not supposed to work with upper case extensions.