It's possible that when you're pasting the picture, it's including the
positioning options as well. So, what you're pasting is going over the
original picture--so you might actually have a number of pictures in that
location right now--one on top of the other.
The clipboard you see is the Paste Options button (Word 2003: Tools -
Options - Edit or Word 2007: Office button - Word Options - Advanced - Cut,
copy, and paste section). Given that you're seeing it, I suspect you're
using Word 2007, since I don't see that button when pasting graphics in Word
2003 -- only in Word 2007. It provides additional options for pasting,
relevant mostly when pasting text.
To copy that picture elsewhere, instead of copy/paste (which is going to
copy the formatting), try Ctrl+dragging it from the header to the new
location. If you want the picture moved rather than copied, then drag
without using Ctrl. (Or, try Paste - Paste Special - and choose an option
other than Microsoft Office Graphic Object.