Is this problem solved? Because I still have this problem and cannot figure out a way to solve it. I deactivated all plugins, and I use Twentyeleven theme.
As OHOHere and alanpuccinelli said, the “Insert Into Widget” button works, if you take an image from the image library without using the search field. But after using the search field, something is broke and the “Insert Into Widget” button no longer works.
In my project, I have hundreds of images, so I am really dependent on the search field.
The only workaround I found, is to re-upload the same image again, so it appears on top of the list. But I hope that there is another solution.
