The attachment is on the "Full Reply" page, click on "File Manager". When you click on "File Manager" it should popup a new page, ensure you don't have a popup blocker which would be suppressing the popup.
The only "file size" option is to set when a photo is automatically included in a post, example: if you (as the admin) set the auto include option to say 5k, when a user uses the file manaager to attach an image that is 25k, it will just be linked to, however, if their photo is 5k or under (as per your limit) it will be automatically loaded in their post using the image tags.
