I found this, don't know if it addresses your problem:

4. I'm using AOL... Why won't the images show up in the messages? (i.e. they only appear in an attachment).



AOL versions prior to v6.0 are NOT HTML based. The main AOL mail server strips outgoing and incoming files of any inline images. These images file (attached audio files too) are sometimes compressed into a .ZIP file that is then attached to the message. The recipient must first unzip the file and then view the images with either their browser or a graphic viewer.

http://www.dailytoast.com/product/faq/receiving.htm