The difference in behaviour is probably because the screen image you're copying from has far more pixels than the 175*175 of the native image. Even so, the size is liable to change depending on how the image is inserted. I have a 256*256 png file that, when copied from Windows Explorer and pasted into Word is sized to 2.133in*2.133in (120dpi). When dragged from Windows Explorer in to Word or inserted via Insert|Picture or an INCLUDEPICTURE field, it's sized to 2.667in*2.667in (96dpi). The latter is my system's nominal screen resolution. A 175*175 picture I'd therefore expect to be sized to 1.82in*1.82in.

For the purposes of your mailmerge, you may need to experiment to get a picture with the correct size.

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Cheers,
Paul Edstein
[Fmr MS MVP - Word]