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So when opening an email that should have pictures, there is nothing there? or just like an X where the picture should be?
Open Outlook and create New Email.
Click on File< Options< Mail.
On the right hand side of the page click on Editor Options< Advanced< Display Email Content.
Uncheck the option Show Picture Placeholders and click Ok.
If you're not comfortable messing with Registry we can setup remote session.
In registry go to HKEY_CURRENT_USER\Software\Microsoft\Office\11.0\Outlook\Security\OutlookSecureTempFolder
In here there should be a directory to a hidden folder, go to this folder and delete everything in here.
You have to look in registry to find it.
Example mine is located here: C:\Users\%username%\AppData\Local\Microsoft\Windows\INetCache\Content.Outlook\4ASNAJJ7\
I found that location by opening registry and going to HKEY_CURRENT_USER\Software\Microsoft\Office\15.0\Outlook\Security\OutlookSecureTempFolder
Yours maybe different for the version number, yours maybe 12.0 or 13.0 etc.