Step 1
Select the instagram photo you wish to use
Step 2
Using your mouse, right click on the image and select "View Page Source"
Step 3
On line 46 you see this:
The image URL you are looking for is found here. It always begins with "https" and it ends with "jpg". Easy to find.
Step 4
Copy the image URL and go into your Steemit settings to paste it there.