Problem: Users getting “Access Denied” error message while trying insert a picture via SharePoint 2010 Rich text editor. Verified that the user has “Full Access” permissions on the specific list, Still gets access denied on accessing layout pages such as: /_layouts/RteUploadDialog.aspx, /_layouts/RteDialog.aspx.
Found it happens to other ribbon actions as well: Insert Link or Upload file.
Found that the particular list is with broken permissions! Although not a perfect solution, granting “Read” access at site level fixed this problem!