Outlook 2003 - Problems with images in email message

[Jeff]

For some reason when I insert an image (.jpg, .gif, etc.) into an email
message using Insert; Picture; browse etc. and finish composing the email and
send, it IMMEDIATELY get's 'bounced' back to me with the following message:

Your message did not reach some or all of the intended recipients.
The following recipient(s) could not be reached:
554 Message refused

I've tried this multiple times, with different email recipients, and
different image formats. Sometimes Outlook will send them, but MOST of the
time it will not, and bounces the message back to me. Any suggestions?

Outlook 2003
WinXP SP2

Please Help!

Thanks,
Jeff