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When inserting .jpeg images from SharePoint 2007 to Outlook 2003 you are prompted for network password
Article ID: 2000611 - View products that this article applies to.
Consider the following scenario:
This results in a prompt for the network username and password. Only after providing the credentials is the .jpeg image inserted into the email message. The same does not occur for .gif images.
Microsoft has confirmed that this is a problem in the products that are listed in the "Applies to" section.
To work around this issue, use one of the following options:
Option 1: Use Word 2003 as the default e-mail editor.
Option 2: After you are prompted for the username and password - enter your credentials and the image is being inserted.
(http://go.microsoft.com/fwlink/?LinkId=151500)for other considerations.