Let's back up a bit on this "insert picture" phenomona because, in my
case, it's quite problematic.
The default upon inserting a picture is "in line with text" but that will
not allow for grouping text around the insert ... it seems to have pretty
much only one text group setting and all text after the insert point is
moved down below the picture/graphic. I have paragraph settings at first
line indent, line spacing exactly 14pt, full justification, and zero
before and after spacing.
Your "in line with text" has a lot of merit inasmuch as the picture has a
particular location but I can't control the behavior of the text that I
want to surround the picture. At the old Ashton-Tate, we never used the
term "bug", we always used the term "anomoly". Is this an anomoly or do I
have more control over the "in line with text" setting than I realize?