The path is probably correct; it needs to be an
absolute file path starting at the beginning of your server filesystem (the starting / in this case means the beginning of the filesystem).
The URL is not a path, it is a URL. URLs begin at the start of your web root (usually something like html or www or htdocs or public_html). In this case, the
relative URL of assets/ is probably fine.
Confusing a filesystem path with a URL is a common mistake. Path is for filesystem structure, URL is for web resources. Path starts at your server’s filesystem root, URL starts at your web root. That’s what the / at the end of your
http://www.mydomain.com/ means. Go to that domain, then get the index file (index.php, in our case) at the root of that web domain.
It can be confusing, because sometimes you want to access a file (an image, for example) with a URL (which is how the web browser fetches the images), or with a filesystem path. The path is what is needed if you are uploading an image, as it gets uploaded to a temporary holding location then gets moved to its permanent location. File paths are also needed when including another file in PHP.
So to use the upload/insert feature in the rich text editor, you need to set both the path for images and the URL for images, since the editor will be doing both: moving the uploaded file to its final place, and storing its URL for proper <img> links, as well as requesting the image for display in your editing window.