I think the best thing to do is download the resizer which Sue posted on the help thread about photos. You should then be able to run that and resize the photos in that.
This is the link she posted for Windows 7.
Free Image Resizer Software, Import organize resize photo
The photos aren't stored in the Kodak software, they will be stored on your hard-drive somewhere and the Kodak software just provides an Management and Viewing tool. By default in Windows 7 if you click on the Start button there is a photo's option and that's probably where the Kodak software stores them.
When you install the resizer one of the options is 'Add VSO Image Resizer 4 to Explorer context Menu. Make sure this is ticked as it will make life much easier.
Once it's installed find the picture in the pictures folder above (not in the Kodak software), then right click on the copy you have made of it and choose VSO Image Resizer. Then...
1. OK past the prompt to buy it, it will let you run it anyway. This software is shareware which means you can run it without buying it, but if you like it they encourage you to buy it, but don't force you to.
2. Choose the size to resize too. When you upload your pictures to OB it will tell you the maximum size OB can take.
3. Ensure the 'Action' is 'Create Copies' so that you keep the full size image on your PC and create a copy with the new size. That way you don't loose the nice detailed picture on your PC.
4. Click Process.
A new picture file will be created which is the new size. Then upload that picture to OB, which should hopefully work.