OE doesn't show graphics after SP2

I only get the infamous red X box where graphics should be. I tried sending myself a jpg and that worked, but it's the emails like newsletters etc that I'm having problems with where the graphics are embedded in the email as opposed to an attachment. Never had this problem before but now have on both my computers that I upgraded to SP2.
I checked "Tools/Options" in OE and the box under "Read" that says "Read All Messages In Plain Text" is unchecked.
Anybody else having this problem or better yet that has figured out what to do about it?

 

That did it Pete. Thanks a million.
Floyd