For annotating your folio try to use descriptive words and make references to the elements and principles. Your teacher may have their own preferred way of annotation, but the following is how I would do it if I were to do the subject again:
For Inspiration Images:
-What do I like/dislike about the image? Why?
-What possible techniques and materials were used?
-What meaning do I get from the image? (Mention theme and subject matter)
-How do I feel when I look at the image? (relate this to aesthetic)
-How have the elements and principles been used?
-Is there an important cultural/historical context?
-How could I incorporate an aspect of this in my own work?
For Documentation Images (step-by-step photos of how you created your own artwork):
-What am I happy with in this part of my work?
-How could I improve it?
-Is this close to what I outlined in my exploration proposal?
-What technique did I use and was it suitable?
-How have I used the elements and principles?
-Are the themes and aesthetics the ones I intended to portray?
-Will this be a part of a final piece? Or will I try something else that could be better?
It isn't necessary to answer every single question for each image; a few sentences per image should be sufficient. Annotation is an essential part of the assessment criteria so make sure what you write is of high quality - don't just say "I like this." without any further explanation of WHY. I would suggest breaking up your answers to these questions so as to prevent huge blocks of text. One way of doing this is to put the Image in the centre of the page and draw arrows from parts of the image to the relevant sentence of annotation.
However, whatever you do, you must follow any instructions your teacher gives you about how they want you to annotate and present your folio. There is also an assessment criteria released by VCAA (for 2012 it is pages 26 and 32 of this pdf:
http://www.vcaa.vic.edu.au/Documents/bulletin/2012/2012FEBSUP1.pdf), which basically tells you what you need to do to get marks. There will probably be a similar one released for 2013 that your teacher (or external assessors) will be using to grade your folio.
Good Luck!

I'm quite new to posting in these forums too
but I've totally been stalking them for a while now.