Evidently you're merging to email. In that case, you can't prevent the image being sent as an attachment; the field code is only for embedding an unlinked image in a document. In any event, there are no mergefields in what you have posted and, if it's just a static image, I'd have to wonder why you're even using an INCLUDEPICTURE field.

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Cheers,
Paul Edstein
[Fmr MS MVP - Word]