Add Image area to Content Type (CCK)

Here is my CCK node template file: node-pgblog.tpl.php

<?php
// $Id: node.tpl.php,v 1.4 2007/08/07 08:39:36 goba Exp $
?>
<div class="node<?php if ($sticky) { print " sticky"; } ?><?php if (!$status) { print " node-unpublished"; } ?>">
  <?php if ($page == 0): ?>
    <h1 class="title"><a href="<?php print $node_url ?>"><?php print $title ?></a></h1>
  <?php endif; ?>
    <div class="taxonomy"><?php print $terms ?></div>
    <div class="content">
	<div class="tabs"><?php print $tabs ?></div>
    <?php print $content ?></div>
    <span class="date"><?php print format_date($node->created,'custom','F n, Y',$timezone = NULL) ?></span> 
    <?php if ($links): ?><img src="<?php print base_path() . path_to_theme() . "/images/icon-comment.gif"; ?>" width="10" height="9" alt="Comment" title="Comment"/>
    <?php print $links ?>
    <?php endif; ?>
    <hr>
</div>

It looks like my images are getting posted to the sites > default > files folder. There is an image cache folder with a "thumbnail" folder and a "large" folder inside it but my images are on the root level of that directory.

I set the display setting for teaser to thumbnail and the full node to large.