Try the following. From the menu along the top of Outlook, select Tools, then options from the drop down menu. Now click on the Security tab. Uncheck the box that says "block images and other external content in HTML e-mails". Now try the mail.
I have this checked myself. If I do get any emails with photos, I click in the yellow banner across the top of the email to show the pictures. I am using XP Home with SP2.