The Image field seems to be broken

The Image field seems to be broken

Hello,
   
The image fields does not seem to be working:
    
I create the image field in the form
add a new record 
- I put a link to a graphic in the image field
- save
- it shows the fine in the default report view telling me the link was saved okay
- if I use IMAGE FIELD it displays fine in a PAGE view.
(so far so good)

However if I UPLOAD a graphic from my hard drive (instead of using a link)
- it shows the graphic fine in the default report view
- but it shows as a broken link in the PAGE view 
  (I am basically using the exact same code in both cases and it should work)

this is driving me crazy maybe I am missing something basic ... when I save a link it works if I upload a graphic from my computer it does not work.

Please help!
    
Thanks
  
David