Not really sure why this is happening, but if I use the Media module to just display a jpg or gif, it appears to work fine. Go away from the site for a day or so, and come back, the image appears and the red x. Go into the Media settings, and file to display is reset back to the first in the list. It's like it lost the image associatation completely. Since I cannot tell because of the darn fileticket and linkclick stuff, I am not sure where it's going wrong.
I have the file permissions set to all users, and I am not using compression. This seems to be occuring on several sites, over several different installations. Can we get an option back that just simply creates an img tag and points to the file since this seems to be the simplest approach anyway? All of the linkclick and fileticket stuff is simply overkill if not needed.