Movie and Movie clip are flash terminology.
They are absolutely essential to almost anything you do with flash.
Creating "movies" is the only way to go in flash because the system does not let you create anything else. I can't help it. I wasn't the one who made it up. Although, lately, I've been calling flash movies "applets."
Well, there's the old fashioned way to what you're talking about, and there's the new easier actionscripty way of doing it. Let's focus on the latter.
In this example:
http://www.sammoses.com/Work/Desktop.zip
I used the flash loadmovie function to load a jpeg image into a movie clip. Take a look at the actionscript I assigned to the button.
In this case, ifile is your target. You want to use your button to load an image there. ifile itself is a movie clip with a square in it. When you press the button, the square is replaced by the image you choose to load. You can change the position of an image by adjusting the x/y properties of the image on that line after you load the button.
So say, you want to load the image inside your square, but you want to keep the original movie clip in the background. In that case, all you have to do it create another blank movie clip inside your existing movie clip, and address it like this. Let's call the second instance of the movie clip X
Don't forget to name your instances of your movie clip objects.
Make sure not to use gif files when you do this. It doesn't work with them. Don't know why, but it's super frustrating when you don't know what's going on.
That said, you could also write a function if you wanted to. Just take this and place it in the frame actions.
Functions are handy, and save you the time of calling the built in function and target every time you want to do something.
To call this particular function,
Just assign this script to your button:
See how much easier that is?
Anyway, you're not going to understand any of this without going through the introduction to flash tutorial included in the program. It'll cover the basics. Things like, what is a movie clip? What is a graphic? What is a Bitmap? What is an instance? What is nesting? It's super easy.
Hope that helped.
-Sam