Confirmed the same issue happens on my device. You can reproduce by doing the following in either the built in hangouts in gmail or the hangouts extension.

1) Take a screenshot within ChromeOS and select option to "Copy to clipboard" once the popup with screenshot pops up in lower right corner
2) Try to paste screenshot into hangouts chat window and nothing happens. The expectation is that it should copy the image into the chat window.

Note if I try to paste into a gmail draft it works fine. It also works fine if I copy an image anywhere in ChromeOS (e.g. copy image from webpage) and then try to paste into a hangouts window. Only screenshots seem to be an issue.

It seems that pasting of screenshots fails and cannot be pasted anywhere when screenshots are saved by default to Google Drive in ChromeOS. If changing the default location of screenshots to Downloads, the issue is not present. Sadly, using local machine storage defeats the purpose of having everything saved to the Google Drive and never losing anything.

Confirmed not working on Asus Chromebook Flip C302CA and Lenovo Thinkpad Chromebook 13. I believe this is an issue on all Chromebooks.

+yoshiki@, +tetsui@, does "copy to clipboard" on the notification work differently if the screenshot is saved to Drive?

BTW, I'm guessing that screenshots are saved in a folder that's set for "Downloads" location in settings. Is it correct?

> BTW, I'm guessing that screenshots are saved in a folder that's set for "Downloads" location in settings. Is it correct?

This is correct, but download folder location can be changed to a Drive directory from Settings > Downloads > Location.

When "copy to clipboard" button is pressed, every time the image is loaded again from the saved location (To avoid keeping the screenshot image in memory, according to the code comment). So the code path is different if the Downloads folder is on Drive.

I tried all combinations of:
1. Hangout
2. Google Docs

A. Download folder on Google Drive
B. Default local Download folder

For Hangout, both A and B failed. For Google Docs, both A and B are successful.

Re #9, That's interesting! Could anyone take a closer look?

I would take a further look.

https://crrev.com/c/781342

The following revision refers to this bug:
  https://chromium.googlesource.com/chromium/src.git/+/a6e33d4ee1539449f56053ce8523c338d247bff2

commit a6e33d4ee1539449f56053ce8523c338d247bff2
Author: Tetsui Ohkubo <tetsui@chromium.org>
Date: Wed Nov 22 03:08:46 2017

Use WriteImage for "Copy to clipboard" button.

Previously, "Copy to clipboard" button in screenshot notification was
not working properly with some websites e.g. Google Hangouts, while
it works as intended on some websites e.g. Google Docs.

The reason was because ChromeScreenshotGrabber was using
ScopedClipboardWriter::WriteHTML instead of WriteImage, by converting
the image to an HTML with img tag.

As a result, in a website that supports pasting HTML, it worked,
but in a website that only supports pasting of texts and images,
it didn't work.

TEST=ChromeScreenshotGrabberBrowserTest.TakeScreenshot
BUG= 675050 

Change-Id: Ic96121cc1fe28927c174c28c4f40e3d3e470ea42
Reviewed-on: https://chromium-review.googlesource.com/781342
Commit-Queue: Tetsui Ohkubo <tetsui@chromium.org>
Reviewed-by: Dan Erat <derat@chromium.org>
Cr-Commit-Position: refs/heads/master@{#518515}
[modify] https://crrev.com/a6e33d4ee1539449f56053ce8523c338d247bff2/chrome/browser/ui/ash/chrome_screenshot_grabber.cc
[modify] https://crrev.com/a6e33d4ee1539449f56053ce8523c338d247bff2/chrome/browser/ui/ash/chrome_screenshot_grabber_browsertest.cc

wow, that was fast. thank you for fixing this quickly.