You're welcome Jimbo.
I suppose we should have done this through the forum interface but because we were using different versions of Outlook, I thought that it might introduce more confusion then solution.
But, for anybody who is interested, if after opening "new" "mail message" and clicking in the body of the new message where you want the picture inserted and then choosing "Insert" from the menu bar. If your option to select "Picture" is greyed out on the Ribbon Bar then perhaps changing your default new mail format from plain text to either rich text or html, will help. You may have to close and reopen Outlook for the change to take effect, not sure.