Outlook Access Denied Opening Jpg or Png

I have a terminal server (RDS) running Outlook 2003 (latest SP and patches) for an office of 20 people.
It is running on Windows Server 2008 R2, latest patches installed. 

When users receive mail that has an attachment of a photo, normally Jpg, or Png, and they try to view it we get an "access is denied" error shown below. If I try to save the file to their documents, and then open it we also get an error. 

Error when opening from disk: "Windows cannot access the specified device, path or file. You may not have the appropriate permissions to access the item". 

Again, only photos, like Jpg or Png. If a user gets a Word doc, PDF doc, it works fine. I tried editing permissions, no luck. All users have redirected folders through group policy. 

Any help would be appreciated!

Thanks. -Karl