To change an inline (inline object: A graphic or other object that is positioned directly in the text of a Microsoft Word document at the insertion point.) picture to a floating (floating object: A graphic or other object that is inserted in the drawing layer so that you can position it precisely on the page or in front of or behind text or other objects.) picture, select the wrapping style you want.

To change a floating picture to an inline picture, choose In line with text under Wrapping style.