I've had a similar problem with simple block text - remedied by simply deleting the entire signature and starting again.

Although it's a pain, try that.

If it continues to bahave in this manner, delete and redo it again, but substitute the image with an alternative of similar format (.jpg .bmp etc), and then again with an image of different format.

Ultimately the problem will be one of three potential issues;

- The image itself is the problem
- The format of the image
- The outlooks signature handling methods

You can find out which by using the above methods, if it's the later, we'll fix it in the next post =)

Ben.