It would seem that despite HTML being set as the default email setting it is showing email logos and other images as attachment lists and not displaying them inline. They have only been using smartermail for 2 weeks and it's not Outlook.! :-) I may have to speak to them further on this on my next visit, next week.
There was a decision to try to use smartermail across the board rather than mix and match with outlook, mainly for support reasons. It might be that it's just too hard to teach old dogs new tricks and i may have to allow power users in management to continue to use Outlook, although i already know it will cause them trouble in calendars and contacts...!!!