I am working with Office 2010 on Win 7.
When i click on insert picture and navigate to the directory where my
pictures are stored i activate the preview pane. However when i
select an image file i am unable to preview it (jpgs, bmps, png or
gifs).

Thank God have the large thumbnail preview possibility in the
directory view options.

However, preview pane is fully operational in windows explorer
operational

Any help or hints on this annoyance?

The view button is a little different in win 7 and offers options
ranging from content view and tile view at the end of the list of
options to large thumbnail view and extra large thumbnail view at the
top of the list of view options. The preview pane is a toggle-able
option next to the view option and when enabled just NEVER shows the
image of the picture to be inserted irrespective of the biew selected.

I repeat preview of pictures is fine in windows explorer amd available
in any type of view from tile to extra large thumbnail