Yes, the picture display is inline with text as you mentioned. I think IE8 is probably the culprit. I use Chrome and everything appears normal for me. However, I will download IE8 tonight and let you know what happens.
Jason, since my last email I found out the problem is caused by my emails being sent in HTML format. When that is the case, the pictures are inline with the text as well as appearing as attachmens. If I send emails w/pictures in Plain Text format (an option), then the pictures appear only as attachments.
So I'm satisfied that I found the cause of my problem and a workable solution. Of course, it would be better if Microsoft allowed the user to send HTML messages with the option of showing attached pictures inline or not. Inline can present printing problems.
So please don't download IE8 on my account, and I do appreciate your response. Truth be told, I have so many problems with IE8 that I'm thinking seriously about switching to Chrome. Not a night goes by that all of a sudden IE8 "stops responding" and must be restarted.