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This is a simple question, and id be happy to answer it. You are going to waaaaaay to much trouble to solve this.
When you create your block, or with the one you have already created, underneath the input field and above the submit button. there is a dropbox where you select the language or content type. You can choose between "html, php, Autoformat(smiliese enabled, AutoFormat(smilies disbled).
You would choose "auto format (smilies enabled)" And use standard [ img] tags around your pics code. cheers.