1. Back up your template first, ok?
2. Look for <$BlogItemBody$> tag in your template.
3. Replace <$BlogItemBody$> tag with the code below:
<div id="first<$BlogItemNumber$>"></div>
<MainPage>
<table align=left><tr><td>
YOUR ADSENSE CODE (square or rectangle format)
</td></tr></table>
</MainPage>
<ItemPage>
<table align=left><tr><td>
YOUR ADSENSE CODE (square or rectangle format)
</td></tr></table>
</ItemPage>
<div id="last<$BlogItemNumber$>">
<$BlogItemBody$>
</div> <br />
<MainPage>
<script language="JavaScript">
var obj0=document.getElementById("first<$BlogItemNumber$>");
var obj1=document.getElementById("last<$BlogItemNumber$>");
var s=obj1.innerHTML;
var r=s.search(/<adsense>/igm);
if(r>0) {obj0.innerHTML=s.substr(0,r);obj1.innerHTML=s.substr(r+9);}
</script>
</MainPage>
<ItemPage>
<script language="JavaScript">
var obj0=document.getElementById("first<$BlogItemNumber$>");
var obj1=document.getElementById("last<$BlogItemNumber$>");
var s=obj1.innerHTML;
var r=s.search(/<adsense>/igm);
if(r>0) {obj0.innerHTML=s.substr(0,r);obj1.innerHTML=s.substr(r+9);}
</script>
</ItemPage>
4. Republish your blog.
5. Now, it's ready. The next step is to mark the place in your post where you want your Adsense ads to appear. How? Use the <adsense> tag.
Example.
This is a post. This is longer post. <adsense> This is another post. This is another post. Etc. Etc.
The ad will appear on the place where you put the tag.
That's all folks!
Note: This only works on current Blogger version, this is not for Beta.
You can put the Adsense Ad to the right by simply changing the align=left to align=right on the table tag.