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If you're unable to embed pictures in email—that is, if while writing an email you click Insert > Picture, go to the browse box and locate a picture, only to be presented with an error message—it may be because, in Internet Explorer, you have the security settings for Internet set to High. Whether you decide to change this to the default settings should depend on how confident you are that your antivirus and other security measures are up-to-date every day, whether you're running a firewall, and whether you're absolutely certain that Install on Demand is disabled—has no tick in the box beside it.
Thank you, Sekirt, for this tip.
Thank you, Denise, for finding this solution. However, Denise insists, “I must say again that it was my friend Stella in Moncton, New Brunswick, who found the answer”. Also, thank you Helen, for reminding me that I hadn't yet included it in my pages.
When everything else is correct and friends still see red crosses in the email you send, check this option.
Click Tools on the OE menu bar and choose Options.
Click the Send tab to bring it to the front.
Half way down the Send tab, there’s a button called HTML Settings. Click the HTML Settings button.
Please scroll down a bit.

Now you’ll get to see this cunningly hidden little box. Just make sure that the white square beside Send pictures with messages has a tick in it.
Click OK a couple of times and you should be in business.
May I say that I cannot understand why Outlook Express would consider that you would add pictures to your email and not want them to be sent?
Let me add that the other settings in this box are a mystery to me and I’ve left them as they were.
If this solution doesn't work, there are a few other things you might check.
Until the email has been sent, the pictures must stay where they were when you inserted them. That is, say you have a new photograph in “My Documents” and you add it to an email. Then, while the email is waiting in the Out folder, you decide that the photograph should be in “My Pictures”. You move it there. When the email is sent, Outlook Express won’t be able to find the picture and so your friend will see only a red cross. Leave the photograph in My Documents until the email has definitely been sent from your computer.
If your Temporary Internet Files haven’t been emptied for a while pictures can be lost. Try clicking Delete Files on the General tab in Tools > Internet Options in Internet Explorer and/or any other browser you use. If, like me, you use several different browsers, each will have a cache of the pages you visit, unless you have Empty Temporary Internet Files folder when browser is closed checked. (It’s under the Security heading on the Advanced tab.) If you do have this checked, pages you visit often will take as long to load as pages you visit for the first time. You have to decide about that one.
See also how to test an email.
If you have a complex piece of stationery with vb script or javascript moving an image, there’ll be a reference to img id. Check that it really does indicate the source of the picture.
Here’s an example.
<img id=spring src="daisy.gif"> <script language=javascript> var images=spring.src;
In this example, which is fairly standard, the real name of the image isn’t given inside the javascript. It’s found through its source, shown as src, and that source is given to the script by the img id tag, which may be anywhere above the javascript or anywhere below it, but never (as far as I’ve ever seen) inside it.
You might like to look at the notes on editing the Birthday Balloon Script. It makes use of an image id.
Lastly, if you have a complex script that you found on a web page, sometimes there’s a tiny mistake in the script itself. Don’t think that just because something works on a web page it’ll work in email. It’s very easy for web pages to find their pictures. It’s much harder for emails to do so.
And don’t be cross with the person who offered the script. Some of them have hundreds of lines of code and it would be so easy to miss one semi-colon or something.
If this has been helpful, or if you have further questions or comments, you can reach me by email.
I’d love to hear from you.