Assignment

Actually, if you think about where the files uploaded from assignment are stored then it's actually logical that students are generally not permitted to access this area directly. If you create one or more assignments with simple or advanced uploading of files you'll see a directory structure inside the 'Files' area of your Moodle class. This is where the uploaded files are stored. If students could upload images to link to from the online text in the same way that the Teacher of the course is able to, then any student could easily navigate throughout the files area and view existing uploaded assignment files. Not very secure!
I suspect that the whole issue of student uploads will not be solved satisfactorily until Moodle 2.x implements workable linkage to an Open Source repository system (such as Elgg). And by the way, Elgg does enable students to have their own private, secure file storage.