Could you describe exactly what you do and what you expect?
I made a test as follows.
I created a paragraph extending on several lines. I then inserted a 1cm x 0.5 cm frame (to simulate a picture) which I anchored to the paragraph, positioning it centered horizontally and vertically relative to paragraph text area, making sure that wrap options was set to Parallel.
Text wrapped around the rectangular frame. Said it otherwise, the frame punched a rectangular area which was removed from available text area.
I changed the anchor to page and character (not "As character") and it also gives the wrap effect described above.
I emphasize word rectangular to insist that this works only with rectangles. You can achieve more complex wrap schemes with graphic objects inserted with Draw-like commands (or pasted Draw objects) right-clicking on it and choosing Optimal Page Wrap where the punched out area follows object border.
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That is not possible in Draw. Why not using Writer?
Okay, I switched to Writer because I'm still not getting the desired results. Text is behind image, can't get it to wrap around. I would very much appreciate some help with this problem.
It is not possible in writer either.