Pictures are not automatically downloaded for incoming e-mails. I get a red "X" and a message when I mouse over the image area is:

"The linked image cannot be displayed. The file may have been moved, renamed, or deleted. Verify that the link points to the correct file and location"

However, when I copy one of the image area and paste it (as you see below), the image that could not be displayed appears as:

Obviously. the image exists. Why can't Outlook find it to display? Is there a setting that I'm missing? I'm new to Office 2010, having been happily using Office 2003 for seven years without this kind of problem. I also noticed a forum thread regarding what seems to be the same question regarding Office 2007, but the responses all related to Firefox, and not Outlook.