Here's a demo of the tool using Firefox as well as a demo in IE of the
part that's different (copying the URL of the image).
Enter your Amazon affiliate ID (if you have cookies enabled you should only have to do this once) and the keywords in the first two fields. Hit Search Amazon to display the amazon search results for the keywords you entered.
Navigate to the product page you want to link to.
Right-click on the image and copy the image location (this is quite easy in Firefox, in Internet Explorer, go to properties and then copy the image location from that dialog).
The ASIN should appear automatically when you paste the image location. If it doesn't, you'll have to get it from the image URL manually.
Change the title to whatever you want the text of the link to be
Hit Generate. This will produce an image link and a text link in the text
field as well as a preview of what the HTML looks like. You can then cut and paste the HTML to use for your web site.