Word 2007 Picture

I create lots of "How To" handouts with screen prints.
In older versions of word, I could paste a screen print into the document,
then "Edit" the picture to add callouts, text boxes and such. Then when I
closed the Edit Picture mode, it would show up in the document as one item.

In Word 2003 there was a button on the picture toolbar to convert the
picture to a Word Picture, then I could Edit it.

In Word 2007, when I right click on a picture, the Edit option is greyed
out. Is there a way to add callouts and such to a picture without having
them all separate objects that move independently of each other?

I feel like I'm missing something obvious. Any suggestions are welcome.

--
Lauri
Bellingham Public Schools
Application Support