You just can't link an image from your computer directly in Blogger or any website. Why? Easy: because NOBODY would be able to see the data. Let me explain.
~ represent the user's folder. If Blogger would let you add it, the path would change between every device, including the server where the website is hosted! (yep, websites are stored in computers like yours)
- Even if that worked, you wouldn't be able to see the image from another device. That happends because you're not sharing your computer's content to the entire Internet (if your computer does, then it's a server). You would need to set up complicated things like Apache, DNS or port forwarding.
So then, how do you add your photo to the Blogger widget? That's simple: use a service such imgur or postimage, then get the direct link or URL of your image.
P.S.: OK, I answered some months late and you may solved the problem... but hey, I'm trying to help!