1) Go to Control Panel » General Display Settings | Primary
2) Expand the "Topic & Post Page Settings" group
3) Enter "Max File Size for Displaying Uploaded Images Inline" in MegaBytes.
From that field's description:
If an image is attached to the post, and if it is smaller than the specified size, it will be displayed in the post. Do not use commas. You may use decimal places, such as 0.5, to specify half of a MegaByte.
Attached image is what your previous setting was 0.
I just updated that number to 1. Which is 1 MegaByte.
Attached images now work fine
