I am using this code directly from the codex.

function echo_first_image ($postID)
{                   
    $args = array(
    'numberposts' => 1,
    'order'=> 'ASC',
    'post_mime_type' => 'image',
    'post_parent' => $postID,
    'post_status' => null,
    'post_type' => 'attachment'
    );

    $attachments = get_children( $args );

    //print_r($attachments);

    if ($attachments) {
        foreach($attachments as $attachment) {
            $image_attributes = wp_get_attachment_image_src( $attachment->ID, 'thumbnail' )  ? wp_get_attachment_image_src( $attachment->ID, 'thumbnail' ) : wp_get_attachment_image_src( $attachment->ID, 'full' );

            echo '<img src="'.wp_get_attachment_thumb_url( $attachment->ID ).'" class="current">';

        }
    }
}

I call it within the loop like this echo_first_image ($post->ID);

The function does call but nothing gets output … as far as I can see there is nothing in $attachments

I do have an image in the post I am using. It’s not a featured image or in a gallery, just in the post.

Am I doing something wrong, or is there something wrong with the code in the first place?

ANS

If you want display an image that is inserted into your content (a hotlinked image, for example), you must use a function like this (source):

add in functions.php:

function catch_that_image() {
  global $post, $posts;
  $first_img = '';
  ob_start();
  ob_end_clean();
  $output = preg_match_all('/<img.+src=[\'"]([^\'"]+)[\'"].*>/i', $post->post_content, $matches);
  $first_img = $matches [1] [0];

  if(empty($first_img)){ //Defines a default image
    $first_img = "/images/default.jpg";
  }
  return $first_img;
}

Then place <?php echo catch_that_image() ?> where you want display the image.

Note: a hotlinked image just placed in your content can’t be set as Featured Image, a bultin WordPress’feature.

Using a Plugin

I would consider using the Get The Image plugin, so you could do something like:

$args = array(
    'post_id' => <id>
    'image_scan' => true
);
get_the_image($args);

The above will try to do things in this order:

1. Look for the post thumbnail
2. Look for the first attached image
3. Scan the post content for a inserted image.

Building support in your theme

However, I’m using a function in a plugin that implements the first two items of the list above.

function gpi_find_image_id($post_id) {
    if (!$img_id = get_post_thumbnail_id ($post_id)) {
        $attachments = get_children(array(
            'post_parent' => $post_id,
            'post_type' => 'attachment',
            'numberposts' => 1,
            'post_mime_type' => 'image'
        ));
        if (is_array($attachments)) foreach ($attachments as $a)
            $img_id = $a->ID;
    }
    if ($img_id)
        return $img_id;
    return false;
}

You can adapt it to also match the third item within Diana’s snippet:

function find_img_src($post) {
    if (!$img = gpi_find_image_id($post->ID))
        if ($img = preg_match_all('/<img.+src=[\'"]([^\'"]+)[\'"].*>/i', $post->post_content, $matches))
            $img = $matches[1][0];
    if (is_int($img)) {
        $img = wp_get_attachment_image_src($img);
        $img = $img[0];
    }
    return $img;
}

Just stick these two functions in your functions.php file and use them in the loop like:

<?php while (have_posts()) : the_post(); ?>
    <?php if ($img_src = find_img_src($post) : ?>
        <img src="<?php echo $img_src; ?>" />
    <?php endif; ?>
<?php endwhile; ?>