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The only thing I can think of is that the image (the one not showing up in Hotmail) has a "hspace=15" tag associated with it as well as an "align=left" so that adjacent text will wrap around it. Is Hotmail not able to display images with text wrap or hspacing/vspacing? Is this an obscure quirk associated Hotmail that I'm not aware of?
I'm asking this from home and thought I'd ask you all before I go back to work Monday to test this theory. Jeez, you'd think I'd enjoy the weekend and forget about it.