Treeshaper's Rage

I think you have to do it when you upload the image. It should give you the option of putting the image in an album, or creating a new album.

Unfortunately, I think there's no way to move pictures around from album to album, other than deleting and re-uploading them.

EDIT: Explored around a little. I guess you can move them. Click on the picture, and on the upper left will be a drop down menu - Options or Actions - select "edit". It will give you an edit page, and underneath the image to the right it will give you the option to move the image, and a drop-down menu of your albums.