OB, the main thing you need to remember is that text has to flow around other objects. So you need to set the text flow options for the stuff you want the text to flow around, not the other way round. I.e. The text does what the other objects tell it to do.
The second thing to know is that for text to flow around something the text must be "below" the thing it's flowing around. This means that the text should be either on a layer that is below the layer the image is on, or it should be at a lower level than the image if they're on the same layer. (Use menu "Item -> Level ->" to move things up and down levels.)
It might be helpful to think of the text flow options as you telling an object to say "Don't put text under me.", rather than telling the text what to do.
It takes a while to get used to this - and I still get things the wrong way round sometimes - but once you remember the rules you'll have fewer problems.