When you record a macro you will get a lot of code that you don't need. That code can safely be deleted.
As you didn't move the selection after adding the new paragraph your subsequent code was executed on the original selection.
When you post code in a question here you need to use the code format button (#)
The only code you actually need is below.
Code:
Sub PastePictureAndCenter()
Dim target As Range
Set target = Selection.Range
With target
.ParagraphFormat.KeepWithNext = True
.InsertParagraphAfter
.Move wdParagraph
.Style = ActiveDocument.Styles("OAR Para No Ind for Picture")
.Paste
.InlineShapes(1).Line.Visible = msoTrue
End With
End Sub