Hi Jeemeedee,
This is a really strange sounding problem. Can you tell me more about the
version of Windows your using and if its a work or a home problem?
Off the top of my head im thinking it could be a diskspace problem although
surely windows will popup a message telling you this.
Have you tried with more than one type of picture?
Does the picture have a little red cross in it? If it does then outlook may
be blocking the picture to prevent any virus/spyware/script from running on
your computer. If this is the case then there should also be a dark grey text
area below the address details with text explaining that outlook has blocked
images from displaying and click here to display them.
Hope this helps and have a fantastic day
-Kevin McAleer