You mean there is suppose to be more?  

I thought maybe he was just amused by the little square or the X.

Happened to me too - try this:

right click on the little red x, and on the menu that pops up, click on properties.

On the screen that shows up, you will see a URL.  Highlight the whole thing, and past it into your broswer's address bar.  You will most likley get the picture to pop up.  then when you go back to the message, the picture will be there!

It has something to do with the host site blocking an outside link.

In this case, the URL is http://photos1.blogger.com/blogger2/6665/2081/1600/cat.jpg