OK, I got it. That means something is wrong with the URL you type/paste into the field. We could close out other unexpected things, if you delete the existing URL, and the button activates (it should).
If you get a red Invalid URL message under the field with the new URL, make sure that it starts with http:// or https://
It would also help if you would paste the URL of the image here that you want to use (it will be public anyway, like mine or anyone else's).