The PHP version that you were using is controlled by your hosting, so we pointed you in the right direction since the first reply. Updating the PHP version is the same as deactivating magic_quotes settings. You can read more info about that here: https://stackoverflow.com/questions/2496455/why-are-post-variables-getting-escaped-in-php
This is a PHP “feature” known as Magic Quotes, which has now been deprecated in PHP 5.3 and removed in PHP 5.4.
I do not understand why you are shocked, we have detected the problem in your hosting and since they were using and outdated PHP version (probably 10 years old), that proves that the problem was on their configuration. There are tons of PHP versions and configurations and we cannot guess which one your server is using.
When your hosting said that there was no problem in its configuration, we insisted because we were 100% sure it was not true. This happens to us every day giving support to our customers.
About the images, you should be able to upload them using the media gallery or directly from the new post area, so I am not sure if you have another problem that makes the image upload to fail in certain areas.
Thank you for your feedback, I’ll tell your advice to my colleagues to improve next video tutorials.