I have the same problem.
Actually the “insert image” button doesn’t work. Also the image is uploaded, but not attached to the post.
In the “insert url” tab, after clicking “insert image” button, the following error shows in firebug:
TypeError: win.send_to_editor is not a function
win.send_to_editor(html);
FEE 2.3
WP 3.4.1