OK, I was able to create a POP account through the account settings instead. For some reason it wouldn't work the other way through Outlook.com. The new POP account seems to be working properly - ie. the incoming emails haven't disappeared, and they've been the inbox for a few hours now. So fingers crossed. Don't know if I should have a POP account in the day and age of IMAP accounts; but it clearly wouldn't work with one POP account as the server and the other as IMAP.

thanks for your speedy answer......do not see "leave copy on server"........I see "check names against this server when sending emails" and it is checked. and the "advanced" is under the tab "active directory properties"..............???

I was all set to give you the directions when I realized that he has a different account name (email address) than you! If you are trying to access a different email address from your account, I believe you would have to be on an Exchange Server and be a Delegate. That would not be an ordinary home setup. Maybe someone else has some ideas. Pam

I myself (having used Outlook 2007) don't know enough about these things to know whether it might be something about your recipients' mail settings or not. But if you're able to send an email successfully to yourself with the image showing inline, it might mean that something about your version of Outlook (what version is it, btw? 2003? 2007? 2010?) is triggering the removal of the image from the body of the message. But I would think if that were the case, then your recipients would at least get the notification "some images have been removed for your safety; click here to display them." Incidentally, you said you sent the test emails to yourself. I take it you viewed those messages in your offline client (Outlook). Did you also view them in your webmail to see if they displayed inline there as well? As another resource, you might want to check the Outlook forums here. I've used them in the past and have gotten good help. I did a quick search there for your issue and found two from 2010 here and here. In neither case did the OP continue the thread, so I have no idea if anything was resolved, but the answers didn't seem to encouraging. :-( But if your version of Outlook is more recent than those available at the time, there may be different settings to try, so you may wish to inquire there anyway. ???