Retrieve and store locally will put the image in the Rc-Help.com server in an image file. This guarantees if the site it up, the picture will work and will not be deleted. If you uncheck the box, it will be stored wherever you got the link from and not protected by Rc-Help.com.
You can also upload the pictures to your album and use the links that way as well. But yes, if you uncheck the box, it will upload the full size image. All I ask is that you don't make them unusually large. but 150k is a good size. I think most of my photos are about 250k max.