a) you will have to use an external photo site like photobucket, imgur etc. this is the best way of doing it. if you don't use external site, lj will block images from dw because it will consider it as "intruding/invading" LJ, which is also not allowed under their TOS.

b) i have already explained how to crosspost from dw to lj in many comments in Storm-Freaks. you must read all that carefully to learn how.